Digital Payment Meaning:
Digital payment or online payment is a method of transferring money using an electronic medium, rather than paper currency or instruments like checks and cash.
A Digital Payment involves not just online transactions, but also offline payments done at physical stores or salons. For example, payments made through UPI to the grocery store or salon qualify for digital payment.
Digital Payments in India
Digital payments in India are being offered to promote cashless transactions and minimize the use of cash in India. As a flagship program of the Government of India, Digital India intends to transform the country into a knowledge-based economy and society with “Faceless, Paperless, and Cashless” being one of its goals.
By 2026, Digital Payments will be worth $10 trillion in India, up from $3 trillion now, says Boston Consulting Group (BCG). Cash will be used less in the coming years, which we already seeing by many indian in their day-to-day lifestyle. Multiple new players are driving a scale of adoption for digital payments thanks to their diverse offerings.
Digital Payment Methods Available in India
A payment link is a great solution for all types of transactions. You can accept payments online without needing a website or mobile app!
In addition to providing customers with an online payment facility, payment links also ensure that you are paid immediately upon delivery. Use payment links to accept online payments at the point of delivery.
There has been a sharp surge in OR Code-based online payment methods in India as smartphones and internet enabled users to make as well as receive payments through their smartphones. Indian banks also are providing their own versions of mobile banking QR codes that users can access through their smartphones.
The most popular form of payment, cards are consist of a variety of features and benefits, such as convenience, security, and offers.
The *99# digital payment method also allows you to carry out mobile transactions without downloading any apps or using any mobile data. It was designed to create a banking environment where underserved sections of society are included in mainstream banking, backed by the USSD and National Payments Corporation of India (NPCI).
In addition to transferring funds, checking bank statements and looking up balances, the service is also available in Hindi.
AEPS, or Aadhar Enabled Payment System, allows banking transactions such as checking balances, withdrawing money, depositing money, sending money, and transferring money between Aadhar accounts. Aadhar verification is used to verify all transactions. No branch visits are required, debit cards cannot be used, and signatures are not required.
The National Payments Corporation of India (NPCI) is also taking steps to promote digital payments in the country by making Aadhaar available to banks where you hold an account.
Using a Unified Payments Interface (UPI) based app, any customer with a bank account can send and receive money via an interoperable payment system. Users can seamlessly initiate funds transfers and collect requests on a 24/7 basis, 365 days a year, by linking multiple bank accounts on the UPI app or their smartphones.
A key benefit of UPI is that you don’t need a bank account or an IFSC code to send money. All you need is a virtual account.
A valid bank account and an associated mobile number are required to use the UPI service. Various UPI apps are available for Android and iOS. In addition to UPI users, there are no transactions charges for sending money, receiving money, or checking out your bank balances.
Wallets enable users to store bank information securely in an encrypted format and to make payments securely. A mobile wallet app can store bank details, such as debit cards, credits cards, and Net Banking info. It also eliminates the need to use credit and debit cards, or remember CVVs or ATM pins if one uses a mobile wallet.
Paying merchants, making online purchases, and sending money are some features offered by mobile wallets.
Bank pre-paid cards:
The type of card you load money on is called a prepaid card. Prepaid cards aren’t linked to your bank account. Generally speaking, debit cards are connected to your account.
Electronic Clearing Service (ECS):
This facility allows loan providers to debit EMIs on a fixed date from the bank account of the borrower using ECS systems launched by the RBI. ECS debit is typically handled by NPCI (National Payments Corporation in India) through the NACH (National Automated Clearing House).
Your bank will need to be informed and a mandate submitted to authorize the institution to debit or credit your account and branch through your bank. In the event that debit or credit transactions occur through your account, you will receive a text message notifying you of the transactions.
A PoS terminal is typically a hand-held device used for reading bank cards at point-of-sale stations in stores where customers use credit or debit cards to make purchases. Nevertheless, as the scope of PoS has expanded with digitization, this service is also available on mobile platforms and through internet browsers.
Different types of PoS terminals exist, such as Physical PoS, Mobile PoS, and Virtual PoS. Physical PoS terminals are those that are stored at shops and retailers. For small businesses, mobile PoS systems save expensive electronic registers by letting them process payments through their tablets or smartphones. Virtual PoS systems work through web-based applications.
Online banking includes transferring funds, opening recurring deposits, and closing accounts. E-banking and virtual banking are also terms used to explain internet banking. In Internet Banking, you can transfer money via NEFT, IMPS, RTGS, or similar online transfer methods. Customers can access all types of banking services through their bank’s websites using a username and password to access their accounts.
Internet Banking has no time restrictions and can be used anytime and anywhere in the world, all year round. It offers a wide range of services that a physical bank cannot offer.
In mobile banking, people conduct financial transactions using smartphones. As more mobile wallets and digital payment apps are introduced, as well as UPI, the scope of mobile banking is only expanding. Mobile banking is a term used to describe the extensive range of services available under this umbrella of services. Customers can use the apps to carry out banking transactions at the click of a button.
Bharat Interface for Money (BHIM) app:
In addition to the UPI application, use of the BHIM application can be made using a VPA. Users can easily link their bank accounts with the BHIM application. BHIM allows users to send money to different bank accounts, virtual addresses, or to Aadhaar numbers using their mobile numbers, debit cards, and bank accounts.
NPCI and BHIM have also collaborated with many banks so that their customers can use this interface.
Benefits of Digital Payments In India
- A major benefit of digital payments is that it speeds up the payment process and eliminates the need to fill out lengthy information. There is no longer a need to stand in line for an ATM or carry cards with you. Digitized Services will eliminate the need for these hassles.
- Other advantages to digital payments, including the fact that they ensure proper verification and authentication of a transaction. You can also add additional security to digital payments by using OTPs and cross-verification, which helps prevent fraud during digital payments.
- An increasing number of Indians are moving towards digital wallets as they can store their bank details, credit and debit card information, enable them to make money transactions at any time, and simply make their payment by centralizing their cards and information.
- Whether it is banks or digital wallets offering rewards and discounts for digital payments, customers have the opportunity to receive regular cashback bonuses, rewards and discount vouchers.
- With digital payments, you can keep an eye on how much they spend weekly and monthly in one place, with access to all transactions on a single dashboard.
- With the advent of digital payment platforms and big data, India’s businesses can now make tax payments online instead of manually, and this will enable them to save days, time and money.
- This will benefit both the government and the economy since the cost of minting currency will also drop since digital transactions will help the government keep track of things.
UPI Transactions (Rupee 2000/- Above) Charges from April 2023 – News Update
UPI Digital Payment/Transactions Charges Update
Starting April 1, 2023, any UPI transaction above Rs 2,000 through prepaid payment instruments (PPI), such as online wallets or gift cards, will incur an interchange fee of up to 1.1%. However, customers will not be charged for UPI payments as the fee only applies to PPI merchant transactions.
For more update – UPI Transactions Charges – Wallets Charge: NPCI Clarifies New Rule
The number of digital payment methods will increase exponentially as people become more aware of financial literacy and financial accessibility. Consumers across India want local payment methods today, tomorrow, and in the future. Businesses who want to capture a slice of this market must offer the above payment methods to them.