As part of its Digital India initiative, the Government of India has been pushing to create a cashless economy. To this end, the government has introduced digital payments in India. Digital payments occur via online mediums and require no physical exchange of money. These payment systems have gained mainstream popularity, leading to the emergence of various modes of financial transactions. As a business owner, you should be well-informed about the different types of digital payment systems and use them to your advantage while conducting business. Let us understand them in detail.
Types of digital payment systems in India
Today, you can efficiently conduct online transactions by choosing your preferred digital payment solutions, including the following:
Bank cards
Bank cards include Prepaid, Debit, or Business or Commercial Credit Cards as alternatives to cash payments. Customers use Credit and Debit Cards for multiple reasons such as convenience, safety, mobility, etc.Unstructured Supplementary Service Data (USSD)
USSD is designed to include sections of Indian society that do not have access to proper banking facilities. Customers can use USSD to execute mobile banking transactions without an internet-enabled smartphone. They can simply dial *99# using any phone to utilise banking services such as interbank fund transfers, balance inquiries, etc.Aadhaar Enabled Payment System (AEPS)
The National Payments Corporation of India launched AEPS to leverage Aadhaar authentication for banking purposes. Customers can use their Aadhaar-enabled bank accounts to transfer funds without any physical activity. Customers can also use AEPS to initiate digital payments at PoS (Point of Sale) terminals and micro ATMs using biometric and Aadhaar Card information.United Payments Interface (UPI)
UPI is a digital payments system that brings various bank accounts under a single application. This feature allows easy money transfers between parties with just a few clicks. Customers do not need a card or bank details, making it a popular digital payment method.Mobile wallets
Mobile wallets enable customers to carry cash digitally. Users can link their bank accounts to the wallet and enjoy secure digital transactions or use the balance to transfer money.Internet and mobile banking
Internet banking has allowed customers to avail themselves of modern banking and financial services via a bank’s website. Similarly, MobileBanking enables users to access a bank’s services via apps downloaded on mobile devices.
Benefits of digital payment solutions
In a heavily populated country like India, digital payments can help reduce disparity and boost inclusivity. The benefits of electronic payments systems in India are as follows:
Easy and convenient
Digital payments are a boon to customers since they are easy to access and operate. Plus, customers do not have to depend on cash and can make payments quickly. Moreover, digital payments do not require physical presence and enable customers to conduct remote transactions conveniently.Economically progressive
Customers are more likely to opt for online payments when they can conduct transactions conveniently. Thus, more people can engage in e-commerce and transfer money electronically. Such movement of funds and the growth of online businesses contribute to the development of the economy.Safe transactions
Dealing with cash can come with its own risks and hassles. With digital payments, you can securely store your money digitally. Methods like passwords and biometric authentication on phones make digital payment incredibly safe.
Now that you know more about digital payment systems, you can utilise these systems and provide convenience to your business and your customers.
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Setting up your business’ own digital payment systems is necessary as India moves closer to a fully-digital future. With HDFC Bank’s wide array of MSME solutions, you can set your business up for success. Click here to get started!
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*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. HDFC Bank recognises the challenges entrepreneurs face while acquiring capital. Thus, HDFC Bank has created MyBusiness, a one-stop solution that gives you easy access to loans, digital solutions and provides you with the essential knowledge you need to run your business. With HDFC Bank MyBusiness, you can scale up, expand your operations, and nurture your business.