There are different types of digital payments in India introduced by the government of India to promote cashless transactions. The digital payments are a part of digital India. In this blog, we shall discuss the top 5 types of digital payments in India.
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What is meant by Digital Payments?
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Digital payment is a type of cashless payment where the payment is made through digital nodes. These digital nodes are used by both, the payer and the payee. Also called electronic payment, no hard cash or physical form of cash is used in digital payments. Digital payments are entirely made online and they are convenient, instant, and time-saving.
In order to encourage and promote digital payments in India, the government of India has been taking several steps. One such step is digital payments. The digital India payments is a part of Digital India campaign. The aim of digital payment is to make India a paperless, cashless, and digitally empowered economy.
When we talk about cash payments, we first have to withdraw cash from the bank account. Then, we can use the cash to pay at stores, shops, etc. Lastly, the shopkeeper goes to the bank and deposits the cash paid by you. This entire process is time-consuming. On the contrary, in digital payment, the money is transferred directly from the payer’s bank account to the payee’s account instantly.
The digital payment system in India is convenient and offers the flexibility of making a payment anytime and anywhere. This method has speeden up the transaction cycle. In addition, post demonetization, people have slowly started taking the digital payment method. Today, even small shop owners and small-time merchants are accepting digital payment.
What are the Different Types of Payment Methods?
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There are various modes and types of digital transactions. Some of them include the use of bank cards, such as debit/credit card, mobile wallets, internet banking, digital payment Apps, UPI (Unified Payments Interface), bank prepaid cards, mobile banking, etc.
Top 5 Types of Digital Payments in India
Now let’s discuss in depth about the top 5 types of digital payment:
Banking Cards
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Bank cards is among the most used type of cashless payment method. It comes with a number of features, such as convenience, security, etc. The main benefit of a debit or credit card is that it can be used for making other types of digital payments.
For instance, you can save your card information in the mobile Apps to make a cashless payment. A few of well-known card payment systems include Visa, MasterCard, and Rupay. You can also these banking cards for online purchase and online transaction, PoS machines, and in digital payments.
How to get a banking card? You can apply for a banking card with the bank in which you have an account. You will have to provide your KYC details. The card allotted to you will be activated within a few days (usually within a week) and you will be allotted a 4-digit pin which you can use during the online transactions in India and other countries.
Unstructured Supplementary Service Data – USSD
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USSD, Unstructured Supplementary Service Data, is another method of paying digital currency. This method of the digital payment system in India can be used without downloading any mobile App and without mobile data. Also, there is no need for the user to have a smartphone to carry out the digital transactions through USSD. This method is backed by the NPCI – National Payments Corporation of India.
This service is also known as *99#. The main aim for which this mode was introduced is to create an environment for the underserved sections of the society and integrate them into banking. One important feature of USSD is that it can be availed in Hindi as well. The USSD can be used for:
- Initiate funds transfers
- Get bank statements
- Make balance queries
How to use*99#? You can use this service easily by following the below mentioned steps:
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You can use this service by dialing *99#. After dialing this number, you can interact with an interactive voice menu.
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Notably, you can use this service only with the number which is registered with your bank account.
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The next step is registration step – you will have to register for MNID (Mobile Number Identifier), MPIN, and USSD.
Aadhaar Enabled Payment System (AEPS)
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AEPS is a service usually used for banking transactions, such as cash withdrawal, balance inquiry, cash deposit, funds transfers, etc. All the cashless transactions are carried out through Aadhaar verification. No physical visit to a bank is required or even there is no need to provide any banking cards. You can avail this service through your Aadhaar Card which is registered with the bank. So, this service can be availed if your Aadhaar Number is registered with the bank.
How to use AEPS? Using AEPS is very simple. All you have to do is provide Aadhaar number and the payment will be made successfully.
Unified Payment Interface – UPI
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The UPI full form is Unified Payment Interface. It is a payment transaction which any customer with a bank account can use with the help of a UPI-based App. You can link more than one bank account with the UPI mobile App on their smartphone and initiate fund transfer seamlessly. The best benefit of UPI is that there is no use of bank account number of IFSC code to initiate fund transfer through UPI. The only required thing is Virtual Payment Address (VPA).
There are a number of UPI Apps both for Android and iOS platforms that you can use. To use the UPI service, you must have a valid bank account and registered mobile number with the bank. Another benefit of UPI is that there are no charges for UPI transactions. You can send and receive money through UPI. Also, UPI id and password can be easily recovered if you misplace them.
How to use UPI? Just download the UPI App and register for the services. Next, create a VPA and get an MPIN, and you are done.
Mobile Wallets
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A mobile wallet is like a virtual wallet where all your banking details are saved in a mobile App. This wallet saves you from the hassle of remembering CVV or 4-digit pins of the banking cards. All your details are securely saved in the mobile wallet. Many banks provide their mobile wallet Apps which can be easily downloaded. Also, there are some private mobile wallet Apps, such as Paytm, Freecharge, Mobikwik, etc. You can add or send money or purchase goods through a mobile wallet App.
How to use a mobile wallet? Just download the respective mobile App and register for its services by entering the requisite information. Next, you can load money from your bank account and reap the benefits of its services.
Now that you know the types of digital payments in India, you can use them. These 5 types of digital payments in India can also provide your business many advantages through cashless transactions.
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