Digital Payment is a way of payment which is made through digital modes. In digital payments, payer and payee both use digital modes to send and receive money. It is also called electronic payment.
Different Types of Digital Payments Traditional Methods of Digital Payment
Cards: Cards are provided by banks to their account holders. These have been the most used digital payment modestill now. Various types of cards are as follows:
–Credit Cards:
A small plastic cardissued by a bank, or issuer etc., allowing the holder to purchasegoods or services on credit.
In this mode of payment, the buyer’s cash flow is not immediately impacted.
User of the card makes payment to card issuer at end of billing cyclewhich is generally a monthly cycle.
Credit Card issuer charge customers per transactions / 5% of transaction as transaction fees.
–Debits Cards:
A small plastic cardissued by a bank. Allowing the holder to purchase goods or services without paying in cash.
In this mode of payment, the buyer’s cash flow is immediately affectedthat as soon as payment is authorized buyers account is debited.
Net Banking: In this mode, the customers log to his/ her bank account and makes payments. All public sectors, large private sector banksallow net banking facilities to their customers.
·E-Wallet:
E-wallet or mobile wallet is the digital versionof physical wallet with more functionality.
User can keep his / her money in an E-walletand use it when needed.
Use the E-wallets to recharge phone, pay at various places and send money tofriends.
These E-Wallets also give additional cashback offers.
Need to have a smartphoneand a stable internet connection,
Some of the most used E-wallets are State bank buddy, ICICI Pockets, Freecharge, Paytm etc.
New Methods of Digital Payment
is a system that
powersmultiple bank accounts(of participating banks),
several banking servicesfeatures like fund transfer payments etc. in a single mobile application.
User can transfer funds between two accountsusing UPI apps.
good UPI apps available such as BHIM, SBI UPI app, HDFC UPI app, iMobile app etc.
Immediate Payment Service (IMPS): It is an instant interbank electronic fund transferservice through mobile phones. It is also being extended through other channels such as ATM, Internet Banking, etc.
Mobile Apps: BHIM (Bharat Interface for Money) is a Mobile App
developed by National Payments Corporation of India (NPCI)based on UPI(Unified Payment Interface).
facilitates e-payments directly through banks and supports all Indian banks which use that platform.
It is built on the Immediate Payment Service infrastructure and allows the user to instantly transfer money between the bank accounts of any two parties.
It can also work by scanning QR codeor using account number &IFSC codeorMMID(Mobile Money Identifier) Code.
Mobile Wallets: It is defined as virtual walletsthat stores card information on a mobile device.
Mobile Wallets provide a convenient wayfor a user to make-in-store paymentsand can be used that merchants listed with the mobile wallet service providers.
There are mobile wallets like PayTM, Freecharge, Buddy, MobiKwicketc. Some owned by banks others by private companies.
Aadhar Enabled Payment Service(AEPS): Customer needs only his or her Aadhaar numberto pay to any merchant. AEPS allows bank to bank transactions. It means the money you pay will be deducted from your account and credited to the payee’s account directly.
New Services are:
Balance Enquiry
Cash Withdrawal
Cash Deposit
Aadhaar to Aadhaar funds transfer
·Unstructure Supplementary Service Data(USSD):
USSD banking or *99# Banking is a mobile banking based digital payment mode with no need of smartphone or internet connection.
USSD banking is as easy as checking of mobile balance.
operations such as
checking balance,
sending money,
changing Mobile Banking Personal Identification number (MPIN) and
getting Mobile Money Identifier (MMID).
Advantages of Digital Payment
Easyand convenient: Digital payments are easy and convenient. Person do not need to take loads of cash with themselves.
Pay or send money from anywhere:With digital payment modes, one can pay from anywhere anytime.
Discountsfrom taxes: Government has announced many discounts to encourage digital payments. User get 0.75% discounts on fuels and 10% discount on insurance premiums of government insurers.
Written record: User often forgets to note down his / her spending. These are automatically recorded in passbook or inside E-Wallet app. This helps to maintain record, track spending and budget planning.
LessRisk: Digital payments have less risk if used wisely. If user losses mobile phone or debit/credit card or Aadhar card, no need to worry a lot. No one can use anyone else’s money without MPIN, PIN or fingerprint in the case of Aadhar.
Drawbacks of Digital Payment
Difficult for a Non-technical person: As most of the digital payment modes are based on mobile phone, the internet and cards. These modes are somewhat difficult for non-technical persons such as farmers, workers etc.
The risk of data theft: There is a big risk of data theft associated with the digital payment. Hackers can hack the servers of the bank or the E-Wallet a customer is using and easily get his/her personal information. They can use this information to steal money from the customer’s account.
Overspending: One keeps limited cash in his/her physical wallet and hence thinks twice before buying anything. But if digital payment modes are used, one has an access to all his/her money that can result in overspending.
Download