Digital payment transactions
Why in news?
Bengaluru, have largest digital payment transactions in the January to October 2022 period, the highest in the country, according to a study by World line India.
- Bengaluru, have made 14.82 million digital payment transactions amounting to 3,620 crore
- The second highest is recorded at Hyderabad, followed by Chennai and financial capital Mumbai
What are the major fields in consideration for survey?
- Physical merchant categories like grocery stores, restaurants, clothing and apparel, pharmacy, hotels, jewellery retail, speciality retail, household appliances, and departmental stores
- Online-space category: e-commerce (shopping for goods and services), gaming, utility and financial services together accounted for over 86% in terms of volume
What are the reasons for digital growth?
Easy on boarding and use:
- They are essentially enabled for a business on its website/app by a payment gateway.
- Once the payment gateway is rightly chosen , all the transaction-related processes are taken care of by the service provider.
Ex: Paytm Payment Gateway, offers 100% online on boarding, instant activation and with minimum documentation to start accepting payments within 24 hours.
- Demonetisation and the pandemic further fuelled the proliferation of electronic payments towards digital transformation.
- Several businesses, fintech firms, government authorities and other institutions have consistently promoted the use of digital payment leading to a boost in awareness
Ex: BHIM App
Smartphone penetration and internet expansion:
- Internet connectivity has starkly improved in India over the years with 5G telecom services rolled out .
- Parallely smartphone usage has seen an unprecedented rise as well, making India the second largest digital population in the world after China.
India will have 1 billion smartphone users by 2026 with rural areas driving the sale of internet-enabled phones.
- Cashless India, Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA), DigiVaarta(spread popularity of BHIM’s barcode-based merchant payment mode ) and DigiShala DD channel launched to promote digital payments are the government’s flagship to digitally empower the country and move towards a cashless economy.
- The Reserve Bank of India (RBI) has consistently released new guidelines and regulations to strengthen the digital payment ecosystem.
Ex: Payments Vision 2025 report
Speedy and transparent transactions:
- Digital payments are instant and can be carried out from any location at any time. This is a huge gain for e-commerce businesses considering transactions can happen 24/7 on their website/app.
- Messages, notifications and confirmation emails make the transaction process simpler and transparent.
- Rewarding Experience: Facilitated through cashback offered by top digital lenders.
Ex: LazyCard by LazyPay starts offering cashback right after you sign up
How are digital payments beneficial for online businesses?
- Reduced Transaction Costs: Using checks for payments, collecting and processing paper checks is an extremely costly, in contrast digital payment is faster, safer, easier to collect, and less expensive to the business.
- Secure ePayment Transactions: ePayment methods and systems offer multiple ways of securing your payments, such as payment tokenization, encryption and more
- Saved Time and Resources: Repetitive and manual tasks that plague accounts payable departments are automated, giving accounts payable department more time to focus on important value-add areas of operation
- Speed of ePayments: Faster electronic payments, like virtual cards, empower businesses to improve security, visibility, and efficiency all while lowering costs and saving time on manual processes.
- Support Remote and Hybrid Work Environments: It allows approvers to authorize payments are coded and captured in a central system, organizing invoice processing and making it easy for authorizers to approve, pay, and execute payments to suppliers.
- One stop solution for paying bills: Many digital wallets and payment apps have become a convenient platform for paying utility bills. internet or electricity bills, all such utility bills can be paid through a single app without any hassle.
What are the disadvantages ?
- Charges imposed by merchants: Employing a payment processor is that it will cost as monthly rental price or merely a percentage of each transaction
- Possibility of deception: Phishing techniques can be used to gain user names and passwords once a hacker has these details, e-payments allow them to make repeated payments before the legitimate account holder becomes aware.
- Dependence on the internet: These methods of transaction rely on the Internet. If your service goes down, it can bring your business to a standstill, resulting in frustrated consumers and a loss of revenue for you.
- Interrupted connectivity : Not all shops are equipped with the facility of online payment. So, it is not possible to perform digital payment in such cases.
- The growth of digital payments in India is going to be a persistent process bringing with it new possibilities and opportunities.
- Right from government institutions to private entities and most importantly the consumer are actively contributing to its advancement.
The time ahead certainly holds exciting developments for digital payments and as businesses get ready to embrace them, choosing a robust and reliable payment gateway will be equally necessary.