The world has been moving towards all things digital for some time now. However, the year 2020 put into perspective the dire need to adapt to digital technology as soon as possible. This adaptation happened almost instantly with the lockdown coming into effect, especially for digital payments in India.
The Indian government has been promoting and propagating online payments aggressively, starting with demonetization back in 2016. ‘Digital India’ had been the guiding force of many economic and financial decisions that pushed Indians to switch to online payments.
According to cashlessindia.gov.in, the Digital India programme is a flagship programme of the Government of India.“Faceless, Paperless, Cashless” is one of the professed roles of Digital India.
Read this blog to know all about digital payments and learn how you can adopt this revolutionary system in your professional and personal spaces.
What is a digital payment?
Digital payment is a transaction that takes place via digital or online modes, with no physical exchange of money involved. This means that both parties, the payer and the payee, use electronic mediums to exchange money.
Please note that digital payments can take place on the internet as well as on physical premises. For example, if you buy something from Amazon and pay for it via UPI, it qualifies as a digital payment. Similarly, if you purchase something from your local Kirana store and choose to pay via UPI instead of handing over cash, that also is a digital payment.According to a report in ET, In India, 66.6 billion transactions worth $270.7 billion are expected to shift from cash to cards and digital payments by 2023. Click To Tweet
What are the different methods of digital payments?
After the launch of Cashless India, we currently have ten methods of digital payment available in India. Some methods have been in use for more than a decade, some have become recently popular, and others are relatively new.
#1: Banking Cards
Indians widely use Banking cards, or debit/credit cards, or prepaid cards, as an alternative to cash payments. Andhra Bank launched the first credit card in India in 1981.
Cards are preferred because of multiple reasons, including, but not limited to, convenience, portability, safety, and security. This is the only mode of digital payment that is popular in online transactions and physical transactions alike. Nowadays, many apps are being launched with the sole purpose of managing card transactions like Cred, Square, etc.
#2: Unstructured Supplementary Service Data(USSD)
USSD was launched for those sections of India’s population which don’t have access to proper banking and internet facilities. Under USSD, mobile banking transactions are possible without an internet connection by simply dialing *99# on any essential feature phone.
This number is operational across all Telecom Service Providers (TSPs) and allows customers to avail of services including interbank account to account fund transfer, balance inquiry, and availing mini statements. Around 51 leading banks offer USSD service in 12 different languages, including Hindi & English.
#3: Aadhaar Enabled Payment System (AEPS)
AEPS is a bank-led model for digital payments that was initiated to leverage the presence and reach of Aadhar. Under this system, customers can use their Aadhaar-linked accounts to transfer money between two Aadhaar linked Bank Accounts. As of February 2020, AEPS had crossed more than 205 million as per NPCI data.
AEPS doesn’t require any physical activity like visiting a branch, using debit or credit cards or making a signature on a document. This bank-led model allows digital payments at PoS (Point of Sale / Micro ATM) via a Business Correspondent(also known as Bank Mitra) using Aadhaar authentication. The AePS fees for Cash withdrawal at BC Points are around Rs.15.
#4: Unified Payments Interface (UPI)
UPI is a payment system that culminates numerous bank accounts into a single application, allowing the transfer of money easily between any two parties. As compared to NEFT, RTGS, and IMPS, UPI is far more well-defined and standardized across banks. You can use UPI to initiate a bank transfer from anywhere in just a few clicks.
The benefit of using UPI is that it allows you to pay directly from your bank account, without the need to type in the card or bank details. This method has become one of the most popular digital payment modes in 2020, with October witnessing over 2 billion transactions.What took credit cards a decade or so to achieve in India, UPI had accomplished in a matter of just two years. Click To Tweet
#5: Mobile Wallets
Mobile Wallets, as the name suggests, is a type of wallet in which you can carry cash but in a digital format. Often customers link their bank accounts or banking cards to the wallet to facilitate secure digital transactions. Another way to use wallets is to add money to the Mobile Wallet and use the said balance to transfer money.
Nowadays, many banks have launched their wallets. Additionally, notable private companies have also established their presence in the Mobile Wallet space. Some popularly used ones include Paytm, Freecharge, Mobikwik, mRupee, Vodafone M-Pesa, Airtel Money, Jio Money, SBI Buddy, Vodafone M-Pesa, Axis Bank Lime, ICICI Pockets, etc.
#6: Bank Prepaid Cards
A bank prepaid card is a pre-loaded debit card issued by a bank, usually single-use or reloadable for multiple uses. It is different from a standard debit card because the latter is always linked with your bank account and can be used numerous times. This may or may not apply to a prepaid bank card.
A prepaid card can be created by any customer who has a KYC-complied account by merely visiting the bank’s website. Corporate gifts, reward cards, or single-use cards for gifting purposes are the most common uses of these cards.
#7: PoS Terminals
PoS(Point of Sale) is known as the location or segment where a sale happens. For a long time, PoS terminals were considered to be the checkout counters in malls and stores where the payment was made. The most common type of PoS machine is for Debit and Credit cards, where customers can make payment by simply swiping the card and entering the PIN.
With digitization and the increasing popularity of other online payment methods, new PoS methods have come into the picture. First is the contactless reader of a PoS machine, which can debit any amount up to Rs. 2000 by auto-authenticating it, without the need of a Card PIN.Mobile PoS terminals are those which work through a tablet or smartphone and Virtual PoS systems are those that use web-based applications to process payments. Click To Tweet
#8: Internet Banking
Internet Banking, also known as e-banking or online banking, allows the customers of a particular bank to make transactions and conduct other financial activities via the bank’s website. E-banking requires a steady internet connection to make or receive payments and access a bank’s website, which is called Internet Banking.
Today, most Indian banks have launched their internet banking services. It has become one of the most popular means of online transactions. Every payment gateway in India has a virtual banking option available. NEFT, RTGS, or IMPS are some of the top ways to make transactions via internet banking.
#9: Mobile Banking
Mobile banking refers to the act of conducting transactions and other banking activities via mobile devices, typically through the bank’s mobile app. Today, most banks have their mobile banking apps that can be used on handheld devices like mobile phones and tablets and sometimes on computers.
Mobile banking is known as the future of banking, thanks to its ease, convenience, and speed. Digital payment methods, such as IMPS, NEFT, RTGS, IMPS, investments, bank statements, bill payments, etc., are available on a single platform in mobile banking apps. Banks themselves encourage customers to go digital as it makes processes easier for them too.
#10: Micro ATMs
Micro ATM is a device for Business Correspondents (BC) to deliver essential banking services to customers. These Correspondents, who could even be a local store owner, will serve as a ‘micro ATM’ to conduct instant transactions. They will use a device that will let you transfer money via your Aadhaar linked bank account by merely authenticating your fingerprint.
Essentially, Business Correspondents will serve as banks for the customers. Customers need to verify their authenticity using UID(Aadhaar). The essential services that will be supported by micro ATMs are withdrawal, deposit, money transfer, and balance inquiry. The only requirement for Micro ATMs is that you should link your bank account to Aadhaar.
What are the benefits of digital payments?
In a country like India, where disparities are sometimes poles apart, ensuring financial equality becomes an issue of prime importance. One of the reasons why our government started vocalizing Cashless Economy and Digital India was to improve access to financial resources. There are multiple benefits that digital payments bring to the table.
Ease and convenience
One of the most significant advantages of digital payment is the seamless experience they provide to customers. Reduced dependency on cash, fast transfer speed, and the ease of transacting make online payments a preferred option. Traditional payment methods like cash and cheques add to factors like risk, steps, and physical presence. With digital payment, you can send and receive funds from anywhere in the world at the click of a button.
Customers transact more online when they see the ease, convenience, and security of online payments. This means that more and more people feel comfortable buying online, investing digitally, and transferring funds via electronic mediums. The increase in money movement and online business contributes to the progress of the economy. This is why online ventures are being launched every day and even more are making profits daily.
Safety and efficient tracking
Handling and dealing in cash is a cumbersome and tedious task. Along with the risk of losing money, there is the hassle of carrying cash everywhere you go and keeping it safe. With digital payments, one can keep their funds secured in online format effortlessly. Nowadays, your mobile phone alone is enough to make and receive payments – thanks to UPI, netbanking, and mobile wallets. Additionally, most digital payment channels provide regular updates, notifications, and statements for a customer to track his funds.
Razorpay Payment Gateway: Your digital payment partner
Carrying forward the mission of Cashless and Digital India, Razorpay is India’s first full-stack financial solutions provider. We aim to enable all businesses, enterprises, entrepreneurs, and freelancers to adopt digital payment methods to grow their business. Razorpay Payment Gateway is our flagship product, providing holistic payment solutions to enterprises, big and small.
A payment gateway is like a portal connecting your bank account to the platform where your transactions occur. This third-party addition is the simplest way for a business to collect online payments via their website. If your venture has a website or an app, then Razorpay Payment Gateway should be your go-to option.
With Razorpay Payment Gateway, you can accept end-to-end payments easily and seamlessly. Some of the key features and benefits include:
- Accept all payment modes: A strong supporter of digital payments, we provide multiple options like Domestic and International Credit & Debit cards, EMIs, PayLater, Netbanking, UPI, and mobile wallets
- Flash Checkout: Thanks to the option of saving cards, your customer no longer needs to type in the card details every time – saving time and increasing sales
- Powerful Razorpay Dashboard: Dashboard provides efficient monitoring by way of reports, detailed statistics on refunds and settlements, and much more
- Protected and Secured: PCI DSS Level 1 compliant along with frequent third-party audits and a dedicated internal security team to make sure your data is always safe
- Run Offers Easily: Razorpay dashboard allows you to run any and every promotional offer at the click of a button
More from the Razorpay Payment Suite
Razorpay Payment Links
Payment Links are one of the easiest ways to accept payments online. You can simply generate a link from the Razorpay Dashboard or ePOS app and share it with your clients. By clicking on the link, your customer can make the payment within minutes.
Razorpay Payment Links ensure safe money movement with our 100% secure ecosystem guarded with PCI DSS compliance. These are extremely simple to generate and require no prior coding or design knowledge. It offers more than 100 payment options to a customer, which ensures timely and accurate payment.
Razorpay Payment Button
We developed a product to integrate digital payments on an existing website since most businesses already have an online presence. Razorpay Payment Button allows you to accept payments on any website or webpage by simply adding a line of code. Within 5 minutes, you will have a customized code embedded on your website to start accepting payments.
Payment Buttons can help you:
- Add an integrated checkout on your website
- Start accepting fees without any integration or coding efforts
- Use one of our existing templates or create one of your own
Razorpay Payment Pages
For people who want to give information and receive payments simultaneously, Razorpay has a better alternative. With Razorpay Payment Pages, you can set up your venture’s mini-website in less than 5 minutes. Payment Pages allow you to add your business information, showcase pictures, and accept payments – all in one. With our ready-to-use templates, you can accept payments for multiple payment modes.
Razorpay Subscriptions is a means to collect recurring payments without troubling the customer to intervene at each payment. This means that professionals can obtain a steady flow of fee payments without worrying about operational barriers. It ensures complete visibility and flexibility, and the customer has full control over his regular payments.
Nowadays, recurring payments via cards are becoming less popular with the rise of digital payments. Thus, Razorpay Subscriptions also brings with it the useful feature of UPI AutoPay. Under this feature, customers can set up recurring payments within minutes via their UPI app.
Join India’s journey towards digital payments!
The digital payment wave in India is not going anywhere. With financial literacy and financial accessibility on everyone’s mind, online payments are going to grow exponentially. As a business and a professional, right now is the right time to onboard the digital payment wagon and enable your customers to transact online securely.
Check out Razorpay’s product suite to unlock growth and start transacting today!