Digital Payments in India/ Ways to do cashless payments for seamless experience

Digital payments are transactions that take 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. As part of the ‘Digital India’ campaign, the government has an aim to create a ‘digitally empowered’ economy that is ‘Faceless, Paperless, Cashless’. There are various types and methods of digital payments:

1)Banking Cards

Indians widely use Banking cards, or debit/credit cards, or prepaid cards, as an alternative to cash payments. Cards are preferred because of multiple reasons like 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

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.

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. 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.

5)Mobile Wallets

Mobile Wallets, as the name suggests, are 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

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.

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.

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.

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.

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

A digital payment system usually converts a traditional cash-operational society to a cashless one. It can be anything from paying for goods and services at a street side shop or transferring money to other individuals online, or  for  making investment trades.



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