digital-payments

What can digital payments do to help E-commerce?

What are Digital Payments?

Digital payments are conducted using online or digital channels that do not require physically exchange of money required. This implies that both of the parties, the payer as well as the person who is paying, make use of electronic means to transfer funds.

The Government of India has been taking a variety of measures to encourage and promote digital payment in the country. In the framework of the ” Digital India’ campaign The government has the goal of creating an economy that is ‘digitally empowered’ which is Paperless, Faceless and cashless’.

Since the onset of the coronavirus epidemic, the majority of consumers have begun to avoid cash transactions and relying on contactless cards because they don’t require physical contact with a person or terminal, and are simple to use.

Banks across a variety of European countries, including those in the UK, Ireland, Poland, Norway and Hungary, quickly responded by increasing the maximum amount for payments made using contactless that do not require a card entry (e.g. within Ireland, for example in the UK the limit was increased by PS30 and then PS45). Belgium as well as the Netherlands also followed suit, increasing the cumulative limit for a series of consecutive contactless transactions.

various-payments-method

What are the various methods of digital payment?

Following the introduction of Cashless India We currently have ten options of digital payments available in India. Some of these methods are in use since more than 10 years, while some are only becoming popular in recent years while others are new.

Banking Cards

Indians often use Bank cards, also known as debit/credit cards, or prepaid ones as an alternative to cash-based payments. Andhra Bank launched the first credit card in India in 1981.

Card transactions are favored due to numerous reasons, which include among them the convenience, portability as well as security and safety. It is the sole method of payment through digital channels that is well-liked in both online as well as physical transactions. These days, numerous apps are being developed for the sole aim of handling transactions using cards like Square, Cred, Square, etc.

Unstructured Supplementary Service Data(USSD)

USSD was introduced to the segments of the population of India that do not have access to internet or banking facilities. Under USSD the mobile banking transactions can be done without internet connection simply by dialing *99# from any feature phone that is essential.

The number is in use throughout every Telecom Service Providers (TSPs) and permits customers to take advantage of services such as interbank account transfer to fund transfer to the account in addition to balance inquiry as well as offering mini statements. A majority of the major banks provide USSD services in twelve languages, including Hindi and English.

Aadhaar Enabled Payment System (AEPS)

AEPS is a bank-led system for digital payment that was created to capitalize on the reach and presence of Aadhar. With this model, customers are able to use their Aadhaar linked accounts to transfer funds between two Aadhaar connected Bank Accounts. At the time of February, 2020 AEPS was higher than 205 millions, as per NPCI figures.

AEPS does not require physical act, such as visiting branches, using credit or debit cards, or signing the document. This model is bank-led and allows digital payment through PoS (Point of Sale/Micro ATM) through the Business Correspondent(also called Bank Mitra) using Aadhaar authentication. The AePS charges for cash withdrawals in BC Points are around Rs.15.

Unified Payments Interface (UPI)

UPI is a payment method that combines multiple bank accounts into one application that allows the transfer of funds easily between two parties. When compared the other payment methods like NEFT, RTGS, and IMPS, UPI is far more defined and is standardized across banks. UPI allows you to make use of UPI to make an online bank transfer from any location with just a few clicks.

The advantage of the use of UPI is the fact that UPI lets you pay your bill directly through your bank account without having to enter the bank or card details. It is now an increasingly requested payments made through digital technology by 2020. the month of October seeing more than 2.25 billion transactions.

Mobile Wallets

Mobile Wallets like the name implies are a kind of wallet that can carry cash, but in the form of digital. Most often, customers connect their bank accounts and banking cards to their wallets to make it easier to conduct safe digital transactions. Another option to use wallets is to transfer funds in your Mobile Wallet and use the account balance to transfer funds.

In recent times, numerous banks have introduced their own wallets. Furthermore, some notable private firms have also made a name for themselves on the Mobile Wallet space. The most popular ones are Paytm, Freecharge, Mobikwik and mRupee. Vodafone M-Pesa, Airtel Money, Jio Money, SBI Buddy, Vodafone M-Pesa, Axis Bank Lime, ICICI Pockets and many more.

Bank Prepaid Cards

A bank Prepaid card is a pre-loaded credit card that is issued by a financial institution, typically for single use or reloadable for many applications. It differs from a traditional debit card in that it is always linked to your bank account, and can be used repeatedly. This could or might not be the case with a prepaid bank card.

A prepaid card is made by any person with a KYC-compliant account simply by going to the bank’s website. Corporate gift cards and reward cards as well as single-use gift cards are the most frequent use cases for these cards.

PoS Terminals

PoS(Point of Sale) is often referred to as the place or area where sales take place. For many years, PoS terminals were considered to be the counters for checkout in retail stores and malls, in which the transaction was processed. The most popular kind used PoS machine is designed for Debit or Credit cards. The cardholder are able to pay by swipe the card, and then enter the pin.

With the advent of digitization and the growing popularity of other payment methods and payment methods, new PoS methods have entered the scene. The first is the contactless reader on the PoS device, which is able to debit any amount that is up to Rs. 2000, by automatically authenticating it without the need for an account PIN.

 

What are the benefits of e-commerce digital payment?

COVID-19 is certainly driving a large portion of currently e-commerce transactions using digital payments, which is helping consumers prepare for a long-term shift. The expected growth in e-commerce and digital payment transactions in 2022 will be a consistent trend across the entire country. Although hygiene is the most important motive behind the adoption of new payment methods however other factors such as the convenience of using them, their ease of use acceptance, as well as incentives are driving this trend of adoption.

The report provides an action plan that governments need to implement to reap advantages of electronic payment. The specific calls to action are:

  • Digitize government receipts and payments such as transfer of social benefits. This creates a base on that the private sector can build upon, for example, payments from person-to person including international and domestic transfer of funds.
  • Get involved in regulations. Governments need to help regulators enable digital financial services, by encouraging competition, providing education to consumers and encouraging business model innovation.
  • Bring together private and public sectors to establish a fundamental technology-based payment platform, where providers compete in the development of new products.
  • Private and public sectors could join forces around a payment platform that can facilitate creativity and competition in other financial services.
  • Create an environment that encourages private sector innovation. Governments must provide an unambiguous vision and concrete incentives for the private sector to be a can be efficient as well as competitive, transparent as well as efficient collaborator.
  • Recognize the significance of remittance service providers by providing an electronic entry point into formal financial services to senders as well as receivers. Instead of cashing out, remittances that are sent into a banking account smart card or e-wallet for instance, could be transferred to accounts that facilitate secure saving, as well as improve transparency and traceability.

 

7 Ways to Improve the Efficiency of Digital Payments

Although digital payments are becoming more popular with more people, the current digital payment system requires improvement to make it more efficient and secure. There is scope for improvements in terms of effectiveness and uniformity. A few factors that are crucial to the acceptance of electronic payment systems include security, speed, trust and an easy-to-use procedure. The faster and more convenient the payment process is the better chance it will have to gain popularity among people.

We have listed 7 strategies to make payment methods using digital technology more effective and boost the number of customers who use them.

The minimum amount for a journey:

The shortest time from the moment you initiate payment until the finalization of payment is a major advantage in the ever-growing battle of the digital payment trend. The customer will be more enthused by a the payment method that completes payment in a few steps. If you offer a electronic payment solutions such as mobile payment apps or peer-to-peer payments application, it can be considered to be a USP if it is able to finish payment processing using a minimal amount of effort.

Maximum tie-ups across systems:

Since online commerce and eCommerce are growing the number of new users are becoming involved in the electronic payment system. With the increasing number of users of cashless payment solutions the inclusion of all banks and financial corporations is required to ensure that customers are not faced with any hassle in using the peer-to-peer application. If a digital payment that is cashless system wishes to accept an incoming user to their system, then the inclusion of all banks within the system is the absolute requirement.

An incentive/Loyalty Program:

In traditional methods of payment, we have observed that companies gives discounts or other benefits to customers who purchase their products or services. This same strategy can be employed to advertise cashless payment systems. If you offer a rewards or loyalty points to users of your product, it entices users to use your service more frequently than the average.

For instance, consumers might prefer to use a the digital wallet over cash if they know that a particular mobile payment application rewards customers with cashback or discounts. These incentive schemes or loyalty program help the payment system in digital form to grow its customer base and also strengthen its position on the market in a highly competitive marketplace.

Compatibility:

Any payment method that is digital should be compatible with all platforms. If the system is only compatible with a specific platform and a system and is not compatible with other platforms, this can cause a problem for the consumer. They is always in a quandary when my payment method that is cashless isn’t accepted by this platform.

Therefore, by providing such a cage, the retention of customers would be minimal over the long run for the digital payment system providers. If any of these companies are in existence the adoption of payments system is the risk of limiting its market potential and the the consumer base. To overcome this issue Any digital payment system should be able to use a standard that is open across all platforms, and not be limited to a specific type of service or platform.

Educate the consumer:

People tend to avoid exposing themselves to new ways of doing things or systems because of fear of losing or discomfort. This is especially true when they are related to cash. In the case of electronic payment system, the main consumer’s concern will be whether the money is being transferred securely or not.

While the trend of digital payments is trending upwards, there is a subset of customers with a traditional reservations about using payment systems that are digital. Therefore, it is crucial to inform potential customers on the advantages of using digital payment systems.

Standardization across browsers and devices:

Different browsers utilize an entirely different method to store your digital payment, keep the details of your credit or debit card and other details. Similar variations are possible for various types of devices. It is therefore crucial for a payment system that is digital to standardize the payment process and make it consistent across all types of devices, browsers and gateways.

Critical information such as the credit card number details, debit card information passwords are utilized in the process of using digital payment. Thus, redirection/pop-upsand OTP verification must be consistent across all browsers, and must be safe from dangers. This standardization can help increase the trust of customers of digital payment systems.

Minimum redirect:

We’ve observed several instances where, in order to make your electronic payment, you’ve been diverted multiple times to different pages. This could be from a banks page, payment gateway pages, OTP page and so on. The redirects are a test of the patientness of the user to be patient until they have completed of the payment.

They also increase the chance of payment failing because it can lead to multiple websites and thus increases the risk of security and also fail payment situations. Therefore, it is always recommended to use a payment system that is digital to avoid redirects in the process of payment.

Final Thoughts:

The digital wave of payments that is sweeping across India will not stop. As financial awareness and access on everyone’s radar online payments are set to expand exponentially. As a business owner and professional, now is the perfect moment to jump onboard the payment platform that is digital and let your customers make transactions online safely.

 

 

 

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