Published: 18th Apr, 2019
Payments made on the UPI platform saw a remarkable growth of over 400% in the April to March period, from a little more than ?27,000 crore in April 2018 to ?1.35 lakh crore in March 2019.
Context
Payments made on the UPI platform saw a remarkable growth of over 400% in the April to March period, from a little more than ?27,000 crore in April 2018 to ?1.35 lakh crore in March 2019.
About
What is digital payment system?
- Digital payment system is a way of payment which is made through digital modes- completely online. No hard cash is involved in digital payments.
- In this system, payer and payee both use digital modes to send and receive money.
- It is also called electronic payment.
- Example- Internet Banking, Debit Cards, Credit Cards, e-Wallets.
How is it better than previous system?
- The conventional system of settling the transaction involves cash payments. We have to first withdraw cash from your account. Then we use this cash to pay to second party. This second party goes to the bank to deposit the cash which he got from us. This process is time-consuming for us and also for the second party.
- But in digital payments, the money transfers from our account to the second party’s account immediately. This process is automatic and neither we nor the second party is required to visit the bank.
- Digital payments help us get rid of long queues of ATMs and banks, thus saving our precious time.
- Payments can be made from any place at any time.
- Spendings are automatically recorded in our passbook or inside E-Wallet app. This helps to maintain our record, track our spendings and budget planning.
Different digital payment modes in India:
- Cards:
- Banking cards offer consumers more security, convenience, and control than any other payment method.
- There are wide variety of cards available – including credit, debit and prepaid.
- Internet Banking
- It is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution's website.
- Different types of online financial transactions are: National Electronic Fund Transfer (NEFT), Real Time Gross Settlement (RTGS), and Immediate Payment Service (IMPS).
- Unstructured Supplementary Service Data (USSD):
- This service allows mobile banking transactions using basic feature mobile phone (dialling *99#), there is no need to have mobile internet data facility for using USSD based mobile banking.
- Key services offered under *99# service include, interbank account to account fund transfer, balance enquiry, mini statement besides host of other services.
- Mobile Banking
- Mobile banking is a service provided by a bank that allows its customers to conduct different types of financial transactions remotely using a mobile device.
- It uses software, usually called an app, provided by the banks or financial institution for the purpose. Each Bank provides its own mobile banking App.
- Unified Payments Interface (UPI)
- It is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
- Each Bank provides its own UPI App.
- Mobile Wallets
- It is a way to carry cash in digital format. Instead of using physical plastic card to make purchases, we can pay with our smartphone, tablet, or smart watch.
- An individual's account is required to be linked to the digital wallet to load money in it.
- Aadhaar Enabled Payment System (AEPS)
- AEPS is a bank led model which allows online interoperable financial transaction at PoS (Point of Sale / Micro ATM) through the Business Correspondent or Bank Mitra of any bank using the Aadhaar authentication.
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