Digital Payment Definition
Digital payment is referred to as those payments that take place using the various types
of electronic medium. These methods do not require payment to be made in the form of
cash or providing cheque.
There are different modes and types of digital payments that are prevalent in India,
which are discussed in detail in the following lines.
1. Banking Cards
2. USSD (Unstructured Supplementary Service Data)
3. UPI (United Payment Interface)
4. AEPS (Aadhaar enabled Payment System)
5. Mobile wallets
6. Point of Sale Machines (PoS)
7. Mobile Banking
8. Internet Banking
1. Banking Cards: Banking cards are the most widely used digital payment system in
India. It offers a great set of features that provides convenience as well as security to
the users. Cards offer the flexibility of making other types of digital payments.
Customers can store card information in the mobile application and pay for the services
using the stored card information.
Banking cards (debit and credit cards) can be used for a variety of digital transactions
like PoS terminals, online transactions, as a payment medium in mobile apps, which
provide any kind of service like grocery, healthcare, rental cab booking, flight tickets,
etc.
The most popular cards are issued by service providers like VISA, MASTERCARD,
RuPay, AMEX etc.
2. USSD ( Unstructured Supplementary Service Data): USSD is another popular
digital payment method. It can be used for carrying out cashless transactions using
mobile, without the need of installing any banking app.
The good thing about USSD is that it works without the requirement of mobile data. The
main aim of this digital payment service is to include those sections of people of the
society who are not included in the mainstream.
The striking feature of the USSD is that it can be availed in Hindi. The USSD can be
used for the following types of activities:
a. Initiating fund transfers
b. Making balance enquiries
c. Getting the bank statements
3. AEPS (Aadhaar enabled payment system): AEPS can be used for all the following
banking transactions such as balance enquiries, cash withdrawal, cash deposit,
aadhaar to aadhaar fund transfers. All such transactions are carried out through a
banking correspondent which is based on Aadhaar verification.
This service can be availed if the aadhaar is registered with the bank where an
individual has a bank account.
4. UPI (Unified Payment Interface): UPI is the latest digital payment standard where
the user having a bank account can transfer money to any other bank account using
UPI based app. UPI enabled payments occur throughout the day and all 365 days in a
year.
Payment can be done using a Virtual Payment Address (VPA). To use UPI services one
must have a bank account and a mobile number registered with that bank account.
5. Mobile Wallets: Mobile wallets are another popular payment option. Here the users
can add money to their virtual wallet using debit or credit cards and use the money
added in the wallet to perform digital transactions.
Some of the most popular mobile wallets are PayTM, Mobikwik, PhonePe, etc.
6. Point of Sale Terminals: PoS terminals are installed in shops or stores where
payments for purchases can be done through debit and credit cards. There are
variations of PoS, one which can be Physical PoS and the other one is mobile PoS. The
mobile PoS does away with the need of maintaining a physical device.
7. Mobile Banking: Mobile banking is a service provided by the banks through their
mobile apps in a smartphone for performing transactions digitally. The scope of mobile
banking has expanded extensively after the introduction of UPI and mobile wallets.
Mobile banking is a term used to describe a variety of services that are availed using
mobile/smartphones.
8. Internet Banking: Internet banking is the process of performing banking transactions
from the comfort of your home using a mobile phone/laptop/ desktop and an active
internet connection. The major type of transactions can all be done using internet
banking.
Internet banking services can be availed round the clock and all 365 days in a year,
which makes it a popular choice for performing digital transactions.
Benefits of Digital Payments
Following are some of the most important benefits of using digital payments:
1. Transactions performed through digital payments systems are faster, easier and more
convenient than traditional banking transactions performed physically by visiting the branch.
2. DIgital transactions are cheaper than the traditional payment system.
3. Digital payments are more rewarding as individuals can get access to a variety of coupons
and freebies for performing digital transactions.
4. The digital transactions leave behind a definite track of the complete transaction which is
helpful to trace payments.
5. Digital payment systems such as PayTM help in payment of electricity, broadband, gas and
recharges for phone and DTH.
