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Indian Digital Payments: Definition, Approaches, and Importance

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Indian Digital Payments: Definition, Approaches, and Importance

What are digital payments?

Online or digital transactions that don’t include a real money exchange are known as “digital payment services.” The payer and the payee, respectively, employ electronic means to exchange money in this case.

To promote and support digital payment services across the nation, the Indian government has been implementing a number of actions. The goal of the “Digital India” programme is for the government to establish a “digitally empowered” “Faceless, Paperless, Cashless” economy. Digital payments come in a variety of forms and execution strategies.

Please be advised that digital payments are made both in person and online. For instance, it counts as a digital payment if you make an Amazon purchase and pay using UPI. Similar to the previous example, if you make a purchase at your neighbourhood Kirana store and decide to pay with UPI rather than cash, it is also a digital payment.

What other types of digital payments are there?

We now have 10 different digital payment options accessible in India as a result of the implementation of Cashless India. Some techniques have been around for over ten years, while others have only lately gained popularity.

Banking Cards

As a substitute to cash payments, Indians frequently utilise banking cards, debit/credit cards, or prepaid debit cards. In 1981, Andhra Bank issued the nation of India’s first credit card.

Cards are favoured for a variety of reasons, including mobility, ease, security, and safety. The only digital payment method that is used often for both online and offline purchases is this one. Nowadays, several card transaction management-specific applications, such as Cred, Square, etc., are being released.

Supplemental Service Data in an Unstructured Format (USSD)

For those portions of India’s population without access to reliable banking and internet services, USSD was introduced. USSD enables mobile banking transactions to be conducted without a requirement for an internet connection by simply dialling *99# on any required feature phone.

Customers may use this number to access services including balance inquiries, mini statements, and interbank account to account financial transfers throughout all Telecom Service Providers (TSPs). The USSD service is available in 12 languages, including Hindi and English, from about 51 major banks.

System for Payments with Aadhaar (AEPS)

Initiated to take use of Aadhar’s presence and reach, AEPS is a bank-led digital payment scheme. Customers can transfer money across two Aadhaar-linked bank accounts using this technology by using their Aadhaar-linked accounts. According to NPCI data, AEPS had surpassed 205 million as of February 2020.

AEPS does not necessitate performing any physical tasks, such as going to a bank, using a debit or credit card, or signing paperwork. With the use of a Business Correspondent (also known as a Bank Mitra) and Aadhaar verification, this bank-led strategy enables online currencies at PoS (Point of Sale / Micro ATM) terminals. At BC Points, cash withdrawals cost about Rs. 15 in AePS fees.

Mobile Wallets

Mobile wallets are a sort of wallet where you may handle money but in a digital medium, as the name implies. Customers frequently connect their bank accounts or credit cards to the wallet to enable safe online transactions. Adding funds to a mobile wallet and then transferring funds using that amount seems to be another way to use wallets.

These days, several banks have introduced their wallets. Famous private firms have also made their presence known in the digital wallet market. Paytm, Free charge, Mobikwik, mRupee, Vodafone M-Pesa, Airtel Money, Jio Money, SBI Buddy, Vodafone M-Pesa, Axis Bank Lime, ICICI Pockets, and others are some examples of widely utilised ones.

Banking on mobile

The term “mobile banking” describes the practise of carrying out transactions and other banking functions via mobile devices, often through the bank’s mobile application. Today, the majority of banks provide mobile banking applications that can be used on PCs, as well as on portable devices like smartphones and tablets.

Thanks to its simplicity, convenience, and speed, mobile banking is seen as the industry’s best financial services future. Mobile banking applications provide access to several digital payment methods on a single platform, including IMPS, NEFT, RTGS, IMPS, investment, financial records, bill payments, etc. Banks themselves want clients to adopt digital since it streamlines operations for them as well.

What advantages can digital payments offer?

Ensuring economic equality becomes a major concern in a nation like India where discrepancies can be extreme. To increase access to financial resources, our government began advocating for the Cashless Economy and Digital India. There are several advantages to using digital payments.

Comfort and simplicity

The seamless experience that digital payments offer to clients is one of its most important benefits. Online payments are a favoured choice because of the decreased reliance on currency, quick transfer times, and simplicity of transactions. Cash and checks are common forms of payment, and they contribute to other considerations including risk, steps, and physical presence. With digital payment, you may easily send and receive money from any location in the globe.

Economic development

When customers experience the simplicity, ease-of-use, and security of online payments, they engage in more online business. This indicates that an increasing number of individuals are at ease making purchases online, making investments online, and moving money through electronic methods. The expansion of internet commerce and money transportation both help the economy grow. Because of this, new internet businesses are starting up every day, and a growing number of them are turning a profit.

Protection and effective tracking

It takes time and effort to handle and trade with cash. Along with the chance of losing money, carrying cash about and keeping it secure may be a bother. One may easily keep their money secure online by using digital payments. Thanks to UPI, net banking, and mobile wallets, you can make and receive payments with just your cell phone nowadays. A consumer may track his funds using the majority of digital payment channels’ frequent updates, alerts, and statements.

Conclusion

In India, the trend toward digital payments isn’t going away. Online payments are anticipated to increase dramatically as financial accessibility and financial awareness become more and more prevalent. As a company owner and professional, now is the time to embrace digital payments and provide your clients the ability to trade safely online.

Bhanu Garg

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