Introduction to Global Digital Payments: A Digital Revolution

Digital Payments are changing the way consumers spend

The world has been shifting towards digitization, adding innovative technologies to every business and every activity that we pursue in a day — it’s been quite a while now. Nonetheless, the year 2020 put into viewpoint the desperate need to adjust to digital innovation quickly. This transformation happened in a flash, with the lockdown becoming effective, particularly for advanced digital payments across the world.

The governments have been advancing and engendering digital payments very aggressively. These advancements have been the directing power of numerous economic and financial choices that pushed people to change to online payments.

What is digital payment?

Digital payment is an online transaction that happens through digital or online modes, with no physical cash exchanges involved. This implies that the two parties, the payer and the payee, utilize electronic mediums to exchange cash.

If it’s not too much trouble, note that digital payments can happen using the internet just as on physical premises. For instance, if you purchase something from Amazon and pay for it through UPI, it qualifies as a digital payment. Additionally, on the off chance that you buy something from your neighborhood store and decide to pay through UPI instead of paying using cash, that likewise is also a digital payment.

“As per a report in ET, In India, 66.6 billion transactions worth $270.7 billion are expected to move from cash to cards and digital payments by 2023.”

Top 10 digital payments methods

Living in a cashless society, we presently have various digital payment methods available across the globe. A few methods have been there with us for more than a decade, some have gotten as of late well known, and others are somewhat new.

1.Banking Cards

Across the globe, we have been using Banking cards, or debit/credit, or prepaid cards, as a choice to cash payments.

Cards are favored in view of numerous reasons, including, yet not restricted to, convenience, versatility, wellbeing, and security. This is the only method of digital payment that is famous in online transactions and physical exchanges alike. These days, numerous applications are being dispatched with the sole reason of overseeing card exchanges like Cred, Square, and so forth.

2.Unstructured Supplementary Service Data (USSD) or Dial *99#

USSD was launched for India’s populace which doesn’t approach appropriate banking and web offices. Under USSD, versatile financial exchanges are conceivable without a web association by just dialing *99# on any fundamental component telephone.

Across all Telecom Service Providers (TSPs), this number is functional. It permits customers to benefit from services including interbank account to account fund transfer, balance inquiry, and availing mini statements. Around 51 pioneering banks offer USSD administration in 12 multiple languages, including Hindi and English.

3.Aadhaar Enabled Payment System (AEPS)

AEPS is a bank-driven digital payments system that was initiated to leverage the presence and reach of Aadhar. Under the AEPS, users can utilize their Aadhaar-linked accounts to move cash between two Aadhaar connected Bank Accounts. According to NPCI data. AEPS had crossed more than 205 million by February 2020.

AEPS doesn’t need any physical presence like visiting a branch, utilizing debit or credit cards, or signing any physical document. This bank-driven system permits digital payments at PoS (Point of Sale/Micro ATM) employing a Business Correspondent (also known as Bank Mitra) utilizing Aadhaar verification. The AEPS charges for Cash withdrawal at BC Points are around INR 15.

4.Unified Payments Interface (UPI)

UPI is a payment system that is at its highest development, culminating various financial balances into a single application. It enables cash transactions effectively between any two parties. Compared with NEFT, RTGS, and IMPS, UPI is undeniably a more regular and standard system across banks. You can utilize UPI to start a bank-based transaction move from any place in only a couple of clicks.

The advantage of utilizing UPI is that it permits customers to pay directly from their respective bank accounts without the need of typing the card or bank information. The UPI-based payments got perhaps the most famous digital payment modes in 2020, with October seeing more than 2 billion exchanges.

It took a decade to see credit cards playing the cash transaction game in India. But, the UPI system got established and accomplished the same in just two years.

5.Mobile Wallets

As the name suggests, Mobile Wallets are a sort of wallet wherein you can carry cash yet in a digital form. Often customers link their bank accounts or banking cards to the wallet to make secured digital transactions. Also, users can add cash to the Mobile Wallet and utilize them to move cash from the available balance.

Today, in the smart world, numerous banks have launched their wallets. Furthermore, eminent privately owned businesses have additionally settled their presence in the Mobile Wallet space. Some prominently utilized ones include Paytm, Freecharge, Mobikwik, mRupee, Vodafone M-Pesa, Axis Bank Lime, ICICI Pockets, Airtel Money, SBI Buddy, Jio Money, Vodafone M-Pesa, and so on.

6.Bank Prepaid Cards

A bank prepaid card is a pre-loaded debit card that a bank issues, normally single-use or reloadable for different uses. When compared to a standard debit card, the prepaid card remains unique. The debit card is always connected with your bank account and can be utilized on various occasions. This may or may not be applied to a prepaid bank card.

A prepaid card can be made by any client who has a KYC-complied account by simply visiting the bank’s site. Corporate gifts, reward cards, or single-use cards for reasons for existing are the most well-known employments of these cards.

7.PoS Terminals

PoS (Point of Sale) is known as the location or segment where a sale occurs. For quite a while, PoS terminals were considered as the checkout counters in shopping centers and stores where the payment was made. The most widely recognized PoS machine is for Debit and Credit cards, where users can make payments by swiping the card and entering the secure PIN.

With digitization and the expanding prominence of other online payment systems, new PoS strategies have come into the digital space. One is the contactless reader of a PoS machine, which can debit any sum up to Rs. 2000 via auto-verifying it, without the need of a Card PIN.

Versatile PoS terminals are those which work through a tablet or smartphone, and Virtual PoS are those that utilize web-based applications to handle payments.

8.Internet Banking

Internet Banking, otherwise called e-banking or online banking, permits the users of a specific bank to make transactions and lead other financial activities through the bank’s site. E-banking requires a consistent web association with make or get installments and access to a bank’s site, called Internet Banking.

Today, most Indian banks have launched their internet banking services. It has gotten quite possibly the most mainstream method for online transactions. Each payment gateway in India has a virtual financial choice accessible. NEFT, RTGS, or IMPS are a few of the top approaches to make transactions through internet banking.

9.Mobile Banking

Mobile banking is the demonstration of managing transactions and other banking activities utilizing smartphones, generally through the bank’s mobile application. Today, most banks have one-stop digital banking applications that can be utilized on handheld gadgets like smartphones and tablets and now and then on PCs.

Mobile banking is becoming quite common and can be the promising future of banking because of its speed, ease, convenience, cost-effectiveness, and customer-friendly nature. Digital payment methods, like IMPS, NEFT, RTGS, IMPS, investments, bank statements, bill payments, and so on, are accessible on a single platform using a mobile banking application. In mobile banking applications. Banks themselves urge users to switch to digital banking as it makes processes simpler and faster for them as well.

10.Micro ATMs

Micro ATMs are a device for Business Correspondents (BC) to deliver essential banking services to customers. These Correspondents, who could even be neighborhood storekeepers or local store owners, fill in as a ‘micro ATM’ to manage instant transactions. They will utilize a gadget that will allow you to make cash transactions through your Aadhaar linked bank account by just validating your fingerprint.

Basically, Business Correspondents will fill in as banks for the customers. Customers need to check their authenticity utilizing UID (Aadhaar). The fundamental services that micro ATMs will uphold are withdrawal, deposit, money transactions, and balance inquiry. The only necessity for Micro ATMs is that you should connect your bank account to Aadhaar.

Read More: What’s Happening with Global Digital Payments?

Top global payment types

• Credit cards permit customers to get finance funds from a bank and cover the balance every month or pay the money back with interest. Credit cards make payments by deducting cash directly from a user’s bank account instead of utilizing a credit extension.
• Digital wallets, including Apple Pay and Google Pay, let customers pay for products and services electronically by connecting a card or bank account. Digital wallets can likewise permit customers to store worth money directly in the application using the credit option.
• Debit transfers allow moving cash directly from a user’s bank account. Account debits collect customers’ banking data and pull funds from their accounts (for instance, ACH in the U.S.).
• Credit transfers are linked to customers’ bank accounts, and they push cash to customers (like wire moves). There are additional payment methods like Giropay in Germany and iDEAL in the Netherlands that work as a layer on top of banks to work with transactions. However, they look more like digital wallets.
• Buy now, pay later is a developing class of payment methods that offer customers prompt financing for online payments, normally repaid in fixed installments over time, for instance, Afterpay, Klarna, and Affirm.
• Cash-based payment methods from companies such as OXXO and Boleto permit customers to make online purchases without a bank account. Rather than paying for a product or service, customers get a scannable voucher with a transaction reference number that can be bought to the ATM, bank, or any convenience store or supermarket to make cash payments. When the reference number for the money payment is matched to the underlying buy, the business gets paid and can transport the product.

Top advantages of using digital payments

The countries began embracing and encouraging Cashless Economies to further develop accessibility to financial resources. There are numerous advantages to digital payments, and a few are listed below.

• Ease and convenience

Quite possibly, the main benefit of digital payments is the customer-friendly experience they give to each individual user. Diminished reliance on cash, quick transactions, and the flexibility of conducting online payments in a suitable choice. Conventional payment systems like cash and cheques add to factors like risky transactions, and mandatory physical presence. With digital payments, users can send and get funds from anyplace, anytime on the planet, in the blink of an eye.

• Economic advancement

Customers execute more online when they see the ease, convenience, and security of online transactions. This implies that an ever-increasing number of individuals feel open to purchasing online, contributing carefully, and moving funds through electronic mediums. The expansion in cash development and online business adds to the advancement of the economy. This is why online endeavors are being launched each day, and surprisingly, more are making benefits every day.

Read More: An Overview: The Cashless Society and Digital Payments

• Security and productive tracking

Taking care of and managing real money is an unwieldy, risky, and drawn-out task. Alongside the danger of losing cash, there is the hassle of carrying cash wherever you go and guarding it. With digital payments, one can keep their funds secured with great ease. These days, your smartphone alone is sufficient to make and receive digital payments — on account of UPI, net banking, and other digital wallets. Moreover, most digital payment channels provide regular updates and alerts and account statements for customers to track their funds and account balances.

• Quicker, simpler, more helpful

Perhaps, probably the most significant benefit of digital payments is that it speeds up the payment interaction, and there is no compelling reason to fill in extensive data. There is no compelling reason to remain in a line to pull out cash from an ATM or convey cards in the wallet. Likewise, with the transition to digital, banking services will be accessible to customers on every minute of everyday premise and the entire days of a year, including bank occasions. Numerous services like digital wallets, UPI, and so forth work on this premise.

• Low transaction cost or zero processing fee

There are numerous digital payment applications and versatile wallets that don’t charge any sort of service cost or processing fee. The UPI interface is one such system where the customer can use services liberated from cost. Most digital payment applications are cutting down costs.

• Waivers, offers, and cashback

There are numerous prizes and discounts offered to customers utilizing digital payment applications and versatile wallets. Multiple digital payment wallets give attractive money-back offers. This comes as shelter to customers and furthermore acts as an inspirational factor to go with digital payment platforms.

• Digital record of transactions

One of the different advantages of going digital is that all transaction records can be kept up with. Customers can follow every single transaction that is made, regardless of how tiny the transaction amount is.

• One-stop solution for taking care of bills

Many digital wallets and digital applications have become a helpful stage for covering utility and other bills. Be it smartphone bills, internet, or to pay electricity bills; all the bills can be paid through a single application with minimal clicks.

• Assists monitor with blacking cash

Online transactions will help the public authority monitor things, and it will assist with taking out the dissemination of dark cash and fake notes over the long haul. Aside from this, this may likewise lift the economy as the expense of printing cash also goes down.

Be it any country across the globe; it is not a digital revolution. Everyone is following the digital payments from small to gigantic companies and, of course, encouraging the cashless society. From ordering a pizza to buying a favorite plant, everything is done online. It is now sporadic to see physical cash transactions. Digital payments, digital money & wallets, and entirely a digitized space seem like “Now and Forever!”