What is Digital Payment?
Digital payment is a way where the payment is made digitally. In digital payments, payer and payee both utilize digital modes to send and receive the cash. It is also called electronic payment. No hard cash is involved in the digital payments. All the transactions in digital payments are completed online. It is an instant and convenient way to make payments.
In cash payments, we have to initially withdraw cash from our account. Then we utilize this cash to pay at retailers. Merchandiser goes to the bank to deposit the money which he got from us. This process is tedious for us and for the merchandiser also. However, in the payments made digitally, the amount transfers from our account to the merchandiser’s account instantly. This process is automatic and neither we nor the merchandiser is needed to visit the bank.
Types of Digital Payments:
From usually used cards to recently propelled UPI, digital payments has numerous kinds of payment. Some modes meant for digital-savvy and some for less-technical persons. Below are the distinctive modes of digital payments.
UPI or Unified Payment Interface is a payment mode which is used to make the transfer of funds through the mobile app. We can transfer funds between two accounts using UPI apps. We should register for mobile banking to use UPI apps. Nowadays, this service is almost available for all type of Smartphone users.
USSD banking or *99# Banking is a mobile banking based digital payment mode. We would not need to have a smartphone or internet connection to use USSD banking. We can easily use it with any phone with basic features. USSD banking is as easy as checking your mobile balance. We can use this service for many monetary and non-financial operations like checking balance, sending money, changing MPIN and obtaining MMID.
The banks provide the relevant cards to their account holders. These are the foremost used digital payment modes till now. Many of us use cards for transferring funds and making digital payments. Credit cards, debit cards and prepaid cards are the main types of cards.
Credit cards are issued by banks and some other entities authorized by Main Banking authorities of the respective countries. These cards provide us the flexibility to withdraw or use additional cash. Credit cards are used for domestic as well as international payments.
Debit cards are issued by the bank where we have our accounts. We can use these cards to withdraw money, checking the balance and so on for the money in our account. Whatever payments we make with these cards debit from our account and credit instantly to the payee’s account. We can utilize these cards to make payments from one bank account to another.
Prepaid cards are another type of cards which can be used to pay digitally. We must have to recharge these cards before using just like prepaid SIM cards.
E-wallet or mobile wallet is the digital variant for our physical wallet with more functionality. We can keep our money in an E-wallet and utilize it as needed. We can utilize the E-wallets to recharge our phones, pay at different places and send cash to our friends. To make E-wallets payments Its mandatory to have a smartphone and a stable internet connection.
Benefits of Digital Payments
Easy and convenient: Digital mode of payments are easy and convenient. As it would not be necessary to take loads of cash with us. All we require is to have our mobile phone or a card to pay.
Pay or send money from anywhere: With digital payment modes, we can pay from anywhere anytime. Suppose our friends or relatives are in need of our help financially. We need not to be worried, as we can send money to our friends or relatives as needed using digital payment modes such as UPI apps, USSD or E-Wallets
Written record: We can often forget to note down your cash spending or even if we note, it will take a lot of time. But we would not need to note our spending every time with digital payments. These are automatically recorded in our bank accounts book or inside our E-Wallet app. This helps to maintain our record, track your spending and budget planning.
Less Risk: Payments made digitally have less risk if we use them wisely. If we lose our mobile phone or debit/credit card we would not have to worry a lot. No one can use our money without MPIN, PIN. But it is advised that we should get our card blocked if we lose it.
Digital revolution has provided an easy way to go for digital payments. India has more than 100 crore active mobile connections and more than 29 billion smartphone users as of 2017. This number is going to increase further with a faster internet speed. The reach of the mobile network, Internet and electricity is also expanding digital payments to remote areas. This will surely increase the number of digital payments.
Digital Payment Statistics We Should Know