September 25, 2021

Digital Payment | Various Digital Payment Methods in India

For the ease of financial transactions, the Digital India program was launched by the Government of India. The vision behind this program is to transform India into a digitally empowered society and knowledge economy. For this people are being educated about leaving cash and turning to digital money. For the promotion of digital payments, many banks and payment companies give attractive offers including cashback offers, reward points, discounts on train tickets, etc.

List of various Digital Payment Methods -

1. Banking Cards (Debit / Credit / Travel / Others) -

Banking cards are one of the most convenient means for digital transactions with security features such as OTP and PIN. They come in a wide variety such as Credit Card, Debit Card, Prepaid Card, etc. RuPay, Visa, MasterCard are some of the examples of card payment gateway. These cards give people the power to purchase items on the internet, in shops, online shopping, ATM money withdrawal, etc which saves time and money of the customers and merchants, thus enable them for ease of transaction.

To get these cards you need to apply to your bank with proper KYC. Generally, you will get an ATM Card when you open a new account, but for credit card bank will check your income and CIBIL score before providing it to you. Along with the card, you will get a PIN or you have to generate it through OTP by visiting the bank atm to activate your card. These cards can be used at ATMs, PoS, Shops, wallets, e-commerce websites, online transactions, etc.

There are some annual fees and limits on cards that can vary from bank to bank. The user can set up a transaction limit based on the card, credit rating, and income. Also, there may be some transaction charges while online transactions

2. Unstructured Supplementary Service Data (USSD) -

This is the method of cashless transactions for which you only need a mobile phone which should have a SIM in working condition. For this, neither a smartphone nor an internet connection is required. This is a mobile banking method, through which you can send money from your bank account to any other account. Not only this, if this facility is available on your mobile, then you can also monitor your bank account. For example, you get the details of transactions in the account or information about the balance in the account on your mobile.

To use the USSD mode of cashless transactions, you will have to dial a number from your mobile. This number is * 99 #. Keep in mind that this service will be available on the same mobile number which is registered with your bank account. Almost all banks are providing this facility. The biggest feature of this cashless banking service is that it can also be operated in regional languages. For this, you have to dial the fixed number for different languages. Such as * 99 * 22 # for Hindi, * 99 * 30 # for Punjabi, * 99 * 28 # for Marathi, * 99 * 24 # for Telugu, * 99 * 23 # for Tamil etc. Similarly, this service is also available in many other languages.

How to use USSD-

As mentioned above, this service is provided by the bank only to those customers whose mobile number is registered with their accounts.

Now you have to apply to the bank for USSD service. The bank will give you the MMID (Mobile Money Identifier) ​​and MPIN (Mobile Pin) i.e. username and password required to avail the service.

Now when you have to send money to another account, then you have to dial * 99 # from your mobile and dial the language code.

With dialing, the USSD service will be activated on your mobile and the name of the bank will be asked first. For this, you have to write the first three letters of your bank’s name or the first four letters of the IFSC code and send it. Now your bank name will be displayed on the screen.

Now you have to choose one of several options as per the instructions. There will be two to three options for sending money. From there, you have to choose the MMID option.

As soon as you select the MMID option, you will be asked for the mobile number of the account to which you want to send money, and then its MMID number, as well as the details of the amount to be sent will have to be filled at the specified place.

After this, to complete the payment process, you have to enter your MPIN and after giving a space, you have to enter the four numbers at the end of your account number. Then you press the send button and your payment reached the designated account.

Through USSD, you can send a maximum of 5000 rupees per day to anyone’s bank account. This is one of the safer options among cashless payment options. Various services in USSD are balance inquiry, mini statement, fund transfer, know MMID, change M-PIN, and generate OTP.

3. Aadhaar Enabled Payment System (AEPS) -

Aadhaar Enabled Payment Service (AEPS) is a digital mode of payment that uses your Aadhaar number to pay your creditors. Unlike other digital modes of payment, AEPS charges you for transactions made by you or on your behalf. The convenience is that it only uses your fingerprint as a password and does not require any signature, account number, or any alphabetic or numeric password. You can also do interbank transfers through it.

4. Unified Payments Interface (UPI) -

It is an online payment system developed by the National Payments Corporation of India (NPCI).

To use the UPI payment system, you must have a smartphone phone, which has an internet connection. Through this system, you can transfer funds from your bank account to someone else’s bank account. At present, many governments and private sector banks are giving the benefit of this facility to their customers.

To use this cashless payment system, you must first download your bank’s app or other UPI-based apps such as Google Pay, Paytm, etc. on your smartphone and register it. After registration, you have to set a PIN which will be used while the transaction. Keep in mind that through UPI online system, you can transfer a maximum of Rs 100000 from your bank account to another bank account.

5. Mobile Wallets -

A digital wallet is the newest and easiest way of payment. This method of payment was not in vogue before demonetization. Although mobile payment services such as Paytm were in existence, their reach was mainly limited to the urban category. After demonetization digital wallets emerged as the most preferred and popular choice of payment instead of cash.

To use a digital wallet for payment, you must have a smartphone and have an Internet connection. Then you have to install an app of a digital wallet on your smartphone. Now apart from Paytm, other companies and many banks have launched apps for digital transactions such as Freecharge, Airtel Money, Vodafone M-Pesa, MobiKwik, Citrus Pay, State Bank’s Buddy, ICICI Bank’s Pockets, Axis Bank’s Lime, etc. Here the Indian government has also launched an app named BHIM App.

All these apps are similar to your wallet. Just like you keep money in your wallet, in the same way, you will have to keep money in this digital wallet and when someone has to pay, instead of giving cash, you will use your digital wallet. When the transaction is completed the amount will be reduced in your digital wallet as per your payment. It has a transaction limit of Rs 10,000 per month for minimum KYC and Rs 1,00,000 for the Full KYC account.

6. Pre-Paid Cards -

This card is issued by banks and other institutions. In this, you are given a card and you can load the amount up to Rs 1,00,000 and you can spend it. When all the money on the card is spent or before that you can load more money on it. For these types of cards, there is no need to have a bank account. The best example of a prepaid card is the prepaid card of Delhi Metro. Where the holders of this card travel cashless and their time are also saved as they do not have to stand in line to get tickets.

7. Point of Sale -

POS is a computerized machine that is used in place of a cash register. The POS machine works for reading debit/credit cards, verifying purchases, and giving goods receipt to the customer. However, this work can change according to business and location.

Here POS stands for Point of Sale. POS Terminal shop or retail store is the place where customers buy goods and pay using POS Terminal. Pos machine is being used in place of the cashier.

A POS machine is capable of cashless transactions and also makes a purchase slip to the customers. All this work is completed in minutes because the need to count money and make slips is over. Now the customer will do this work himself. You just introduce them to POS Terminal.

A pos terminal usually does the following.

  • Debit / Credit Card Processing

  • Receiving Payments

  • Making Purchase Receipts

  • Creating Inventory

But apart from these four main functions, the work of the poses also changes depending on the type of store and the nature of the business. For example, the pos terminal at a toy store is different from a hotel/restaurant pos system. However, their basic structure and functioning do not change.

8. Internet Banking -

Net banking is a facility offered by the bank in which people are able to use all the facilities of the bank through the internet at their home computers or mobiles. With the help of internet banking, you can check your account balance as well as make transactions. You can get the full facility of net banking by activating your net banking in the bank. Net banking is a means by which you do not need to go to the bank. Different types of online transactions that can be done by net banking are National Electronic Fund Transfer (NEFT), Real Time Gross Settlement (RTGS), Electronic Clearing System (ECS), and Immediate Payment Service (IMPS).

9. Mobile Banking -

Mobile banking is a money transaction done through your mobile phone. Physical cash does not matter on this banking platform. It only deals with your bank account and with the bank account of those with whom you are dealing with. Transactors through this medium do not have to stand in the bank’s line nor carry huge cash in their pockets. To do mobile banking, you only need a smartphone and have an internet facility. However, there is some software for mobile banking that runs on ordinary mobile phones and an Internet connection is not mandatory for that.

Software and apps for mobile banking are Unstructured Supplementary Service Data (USSD), Unified Payments Interface (UPI), Digital Wallet, etc. For mobile banking, you get a user ID from your bank and a mobile PIN (MPIN). Many banks have made your fingerprint the same MPIN to make mobile phone banking even more secure. This reduces the possibility of fraud.

10. MICRO ATMs -

Micro ATM looks like a swipe machine, using which you pay online at the shops with the help of your card. However, its work is much more than a swipe machine. This micro ATM is GPRS enabled. It is used in the same way that you use an ATM. The only difference is that you have to go to the ATM to withdraw money from the ATM, while the micro atm comes to you.

To withdraw money from it, one has to swipe his card and insert a PIN into a micro ATM. After this, the amount you withdraw is deducted from your account. However, in the case of micro ATMs, money does not come out of the machine, but the representative of the bank who took the machine to you gives you the money.

This machine is most commonly used in areas that are very remote, where it is not possible to install a bank or ATM. People of such places are also connected to the banking system and they are helped through micro ATMs.

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