Digital Payments.

 

 The Digital India Campaign of the government of India with a vision to transform India into a digitally empowered society and knowledge economy. "Faceless, paperless, cashless" is one of the professed roles of digital India. As part of promoting Cashless transactions and converting India into a cashless society. Before 2016 it was very difficult to transfer money from one account to another. people used to visit banks and atm. it was time taking process. They used to make payments in cash mode at that time. but now it becomes so efficient that you can transfer money at any time anywhere with your devices. at this time we don't need to carry cash in our hands. we can pay everyone via UPI. in financial year 2022  around 71 billions digital payments were recorded across India.  by the year 2025 India will become cashless and digital.

 Various modes of digital payment are available. 

modes are :

Banking Cards.

USSD.

UPI.

Mobile wallet.

Banks pre-paid card.

Internet Banking.

Mobile Banking.

micro atm.

Benefits of using Digital payments.

The e-payment systems will also allow you to make cash applications instantly and let you reconcile your financial records with great accuracy. This will eliminate your accounting errors and help you to keep your records more clear. But the advantages of using an electronic solution for payments are not just limited to this, here are some essential benefits of electronic payments:

1. Instant Payment

Electronic payments are much faster than the traditional methods of payments such as cash or cheques. In the case of online payments, you do not have any constraint of time or location. You can easily make payments at any time from anywhere across the globe.

E-payment systems have eliminated the need for going to the banks to make payments. Now your customers do not have to waste their time standing in the long lines at banks. They can easily pay you by using an electronic payment app.

2. Higher payment security

Despite its robust features, electronic payments systems has not become so popular among the merchants. They are still using the same old methods for accepting payments. Due to which, they are missing out the opportunity for serving more customers.

Electronic payment systems offer you multiple ways of securing your payments such as tokenization, encryption, SSL, etc. Now your customers do not have to enter their card details every time as they can save their card details or complete their transactions by using a One Time Password.

3. Better customer convenience

Electronic payments can help you to provide convenient payment experience to your customers. It allows your customer to purchase goods on credit by offering them with the pay later facility. Instead of sending constant reminders for payment to your customers, you can automatically collect money after a specific period.

4 Saves processing costs

If you want to provide payment services to your customers then you first need to tie up with a card processor. The processor will provide you with a payment gateway for processing and in exchange, it will charge a fixed cost from you. This cost is very high.

On the other hand, if you are using an electronic payment system in your business then you do not have to incur such high charges. You just have to pay a fixed subscription to your service provider.

5. Low risk of theft

The phrase ‘Cash is the king’ is popular in the business world, but this king has also had some limitations. If you are using cash for accepting payments from customers, chances are there it can be stolen. Also, you need to take high safety measures in depositing cash into your bank account.

But this risk can be decreased if you are using a secure electronic payment system in your business. By using it, you do not have to worry about your payment record. You can easily get an accurate record of all your transactions at the end of the day.

6. Transparent

Transparency becomes an essential factor when it comes to payments. And when you are using the digital medium for accepting payments, then it becomes essential for you to maintain transparency in your transactions.

In the case of electronic payments, you do not have to worry about the record of your payment details. Also, you can provide the payment details to your customers beforehand. So that there will be fewer chances of confusion.

7. Contactless

In the times of the COVID-19 pandemic, people have started finding ways of avoiding human touch to save themselves from getting affected by the coronavirus. Due to this, the need for contactless payments has increased.

You can use contactless POS terminals in your business to avoid the human touch. In this system, the payee needs to hold his phone near the terminal and his payment will get automatically processed. Also, you can enable your customers to make payments by using QR codes or One Time Passwords (OTP).

A truly digital cashless society is intuitive and imminent. Several countries such as Singapore, Hongkong, Sweden had started the journey quite early. However, most of these early initiatives were centered around plastic money that comes in various forms, such as debit and credit cards, prepaid cards, and store cards. The intention was to encourage monetary transactions through digital means and limit or remove the flow of hard cash in the economy. 

India is no exception to the cashless society proposition. However, the national priority of transitioning to a cashless economy has stemmed from way more advanced and meaningful reasons. The challenges in India are different and more than the challenges in other countries, such as the ones associated with cash circulation (difficult to trace, inconvenient to carry, expensive to print, and timely withdrawal of mutilated/soiled currency). It has found more significant meaning in dissolving the frictions that exist in the entire process by eradicating intermediaries, transfer the benefits and subsidies of various social welfares directly to the last mile beneficiaries, ensure access to banking to all households within the country, curb corruption and more. 

This has led to the emergence of a plan that aspires to leapfrog the 1.3 billion population cash generation from a ‘less paper’, ‘less people’, ‘less cash’ and ‘less friction’ banking environment to a truly ‘paperless’, ‘people-less’, ‘frictionless’ and ‘cashless’ environment. 

Transformational measures taken by the Indian Government

Demonetization: On November 8, 2016, India went through demonetization by abolishing high-value currency overnight– a move that gave an unanticipated fillip to a cashless Indian economy.  It nudged the cash-dependent Indians to go digital in unprecedented ways. PayTm for example, saw a surge in overall traffic (700% increase), value of money added to PayTm accounts (1000%) touching a record 5 million transactions a day. Fueled by the pandemic and the ensuing lockdown, the overall bank notes printing volume has reduced by 13% and the money circulation has declined by 23.3%1. 

United Payment Interface (UPI): Being one of the largest contributors to cashless transactions, it is a popular choice among Indians for its convenience, speed and access. With no fringe accounts, no restrictions on minimum payment, and the advantage of a 24*7 real-time basis payments with zero service costs, the rate in increase in UPI transactions has been spectacular. It clocked an all-time high 3.2 billion transactions in July 2021 displaying a 10-11% jump in both value and volume month-on-month2. In fact, it has become a catalyst for a dramatic rise in several private players in India with several private players such as Google Pay, Amazon Pay, PayTm, PhonePe and even Whatsapp Pay.