In the world of technology, digital payment has played a major role in peoples life. In order to achieve a cashless society and minimise the cash-based monetary system and economy, digital payments emerged.
The use of digital payments services have made peoples lives more quick and convenient. Hence in the developed countries, the use of digital payment services is ever increasing and the developing ones are in the initial phase.
Digital payments mostly today known as a digital wallet. This can help you to pay your bills, get your tickets, and many more. It can help you to get all the cash related transactions through electronic means like smartphones and the web. Since digital payments are common through smartphones rather than web, so the use of digital payment apps is in trend. All you need to do is install a digital payment app that works in your country include all your financial information. Having a bank account is a must to get access to the digital wallet.
How the Digital Payment Works?
In the Digital payment there are the roles of four different people. First one is said to be a cardholder, second is issuer who provides card to the cardholder(bank), third one is merchant who sells product to the cardholder, forth one is the acquirer is the financial institution that establishes an account with merchant. The payment processor handles the transactions between the cardholder and the merchant. The payment gateway processes merchant payment messages.
Digital payment can be of many types but some of the common forms of digital payments are banking cards, mobile banking, internet banking etc.
Banking cards payments: Banking card is usually are of two types. One is the debit card and the other is credit. Nowadays, many debit cards are both debit and credit. You can use it in both ways. When you make a purchase then the card asks you to choose between debit and credit. You have to add a PIN. On the use of a debit card, you might even get cash back. But the use of credit cards can keep you in danger because it has the interests and due to the interest rates, the purchase value of something might increase more than its actual value. So more precautions should be applied in the case of credit cards.
Mobile banking is one of the examples of the digital wallet. In mobile banking, you can connect your bank account directly to the mobile banking app and you can send and receive the money. The information of cards can be used in the digital payment apps, banking card helps in the digital payments, online transactions or any online purchases. Digital Wallet has two component. A software component ensures security and data encryption other is information component which consists of the personal user data( name, card details and payment options). Mostly Digital wallets are used to pay bills, pay your loans or just for online purchases or to book up the flights.
Similarly, Internet banking helps users to get logged into a website and get all the banking services and facilities through the internet. Internet banking helps to know about your account balances, fund transfers, bill transfers and many more. But the major differences between mobile banking and internet banking is that it requires internet. The work of mobile banking may be the same but the transfer of funds it is rather time-consuming.
Bank Transfer Payments: The bank transfer payment works include the transfer money from one bank to another through different ways. Bank transfers happen all over the world are renowned though different names.
Local Payment methods: Local digital payment methods can vary from one country to another. It consists of the digital payment apps and systems and services available in a particular country.
With the above described digital payments, a user can get a lot of benefits from the use. Some of the benefits of the use of digital payments are described below:
- Digital payment is more convenient and easy to use. It saves a lot of time spent on visiting banks several times, or to get your internet, utility or electricity bills paid. You don’t have to worry about banks getting closed or opened. The 24 hrs service of digital payments has made it more flexible to use. Similarly, e-payment is more so easy that a normal person or non-technical can add and check the payments
- Digital payments keep the record of each and every transaction you performed. It keeps the record of the money you paid for your electricity bills or may be about the money you did transferred or spent. Hence, it is more effective to use.
- Digital payments are more economical in nature. It is economical in the sense that a government does not have to charge or pay a large sum of money in printing cash. In the same way, the cost of technology and transactions are lower or minimum.
- Digital payment helps in the fair distribution of money. There is a
track toevery transaction of money from one source to another. So due to the presence of protocols, the effective security for every digital payment is guaranteed ins a safe and secure way.
- If you are running up a business, the use of digital payments can be necessary especially the e-commerce ones.
Digital payments may be in trend but still, there are so many drawbacks or lack of proper rise in the use of Digital Payments.
- Due to the lack of knowledge about online banking, people don’t prefer to use digital payment system. So to the non-tech savvy people, the fear of someone having access to your bank account mostly can be a big issue.
- Especially in the countries having low economy are not forward with the digital payment system and its services. In that case, most of the day to day financial activities are performed through cash. Hence, people who are are more habituated or used work on cash would not prefer to use digital payment.
- Although some of the digital payment apps may have the protocols of safety and security, it is still vulnerable to hacking. Without identity verification like face recognition and biometrics, anyone can access your cards and e-wallets.
- If you claim for unrecognized authorization of your bak account, then it might be difficult for you to win a fund and receive a refund.
Hence even with the benefits and the drawbacks, the use of digital payment is taking the economy of most of the countries. With the everyday use of the technology people prefer e-banking and digital payments in any cause. Still some of the countries are progressing while some are near to achieve a aimed ‘cashless society’.