In early 2000s, internet-powered payment systems (RTGS, NEFT, etc.) were introduced. With smartphones witnessing a massive surge in popularity, the next step in the evolution of payments happened – mobile payment platforms and digital wallets. This new kind of financial infrastructure is one in which customers are far more involved and integral than they were in the bank-centric times. Software giants like google and consumer electronics manufacturers like samsung have started competing with the likes of traditional banking and financial organizations. As part of the ‘Digital India’ campaign, the government aims to create a ‘digitally empowered’ economy. There are various types and modes of digital payments. Some of these include the use of debit/credit cards, internet banking, mobile wallets, digital payment apps, Unified Payments Interface (UPI) service and more. Digital payment methods are convenient and a good alternative to traditional payment methods and provide customers the flexibility to make payments from anywhere and at any time. There is no need for cash and cheques in this type of payment method and speeds up transaction cycles. There are ten types of digital payment methods in India:
- Banking cards
- Aadhaar Enabled Payment System (AEPS)
- Mobile Wallets
- Bank pre-paid cards
- Point of Sale (PoS)
- Internet Banking
- Mobile Banking
- Bharat Interface for Money (BHIM) app
Paytm, which is the largest Indian mobile payment wallet with more than 100 million users, saw app downloads going up by three times and payments for offline transactions by five times in the first two days following the government’s move on demonetization. Mobikwik with its 35 million customers saw a 100% increase in customer numbers as well. HDFC’s Chillr mobile payment app has seen a growth of 30% in app usage and a 50% increase in downloads. PayU digital wallet also experienced a rise in wallet loads. There has also been a surge in retail merchant enrolments to E-Wallet services. Digital wallet Freecharge has seen a 10 fold increase in the number of retail merchant signups during recent times.
Benefits of digital payments include:
- Access to digital records of transactions.
- It is faster easier and more convenient.
- Attractive offers such as waivers, discounts and cashbacks.
- It is more economical with lesser transactions fee.
- It provides a one stop solution for paying bills.
- It is a hassle-free and secure way to make payments.
Adoption of technologies like NFC is also making it easier for merchants and businesses to accept digital payments. Technology has played a vital role in creating a positive framework, and new bank regulations have paved the way for inclusive banking. With whatsapp integrating payments option, digital payments will witness further growth in the country.