The shift from cash to digital payments is a significant trend reshaping the financial landscape. This payment method is the new norm for millennials and Gen Z. Around 85% of Gen Z and 82% of millennials prefer contactless digital payments. From 2015 to 2018, debit and online credit card transactions grew by nearly 9% annually.
As a result, banks are investing in modern payment technologies. During the pandemic, touchless payments became essential for safety. Cash and checks are fading fast, and for good reason.
Understanding Digital Payments
Digital payment is a convenient, cashless method of transferring funds between accounts. It uses electronic platforms like mobile apps, cards, or online services. These payments work both online and in stores. For example:
- Paying for an online order using UPI
- Using a digital wallet, credit card, or banking app at a grocery store
Depending on the process, transactions may be fully or partially completed online. You only need to carry your phone or card instead of cash, which makes it secure and convenient.
Types of Digital Payments
To promote cashless transactions and reduce the exchange of cash, many digital payment options are available, such as:
- Banking Cards
Banking cards offer security, convenience, and control for payments. With credit, debit, and prepaid options, they provide flexibility and secure transactions using PIN and OTP. RuPay, Visa, and MasterCard are popular card networks.
- Unified Payments Interface (UPI)
UPI lets you link multiple bank accounts in one app for easy money transfers and payments. You can send, receive, or request money anytime. Banks offer their UPI apps for Android, iOS, and Windows.
- Digital Wallet
A mobile wallet is a digital way to store and use money. You can link your credit or debit card or add money online. Instead of using a physical card, you can pay with your phone, tablet, or smartwatch. Banks and private companies offer their e-wallets for easy transactions.
- Net Banking
Online banking allows you to manage your money through a bank’s website. You can make payments, transfer funds, and handle other transactions anytime, anywhere.
How Do Digital Payments Work?
Electronic payments allow funds to be transferred through platforms such as apps, cards, or websites. The process securely links your payment method to complete transactions instantly. Here’s how digital payments work:
- The customer selects a payment method like UPI or a mobile wallet
- The system securely processes the payment details
- It checks the balance and transfers money from the customer’s account to the seller’s account
- Both the customer and the seller receive a confirmation
Comparing Digital Payments with Cash
Some key advantages of digital payments that aren’t available with cash payments include:
- Transaction Speed
Most digital payment methods only take a few seconds to complete a transaction. Simply enter your UPI ID or PIN, and you’re good to go. On the other hand, with cash payments, the cashier must count the money and provide change, making the process much slower.
- Convenience
You can buy whatever you want online from the comfort of your home. Link your account with online retailers of your choice and prepay for your purchase. Although cash-on-delivery may be an option, paying the exact amount in cash can be challenging
- Security
Digital payments use encryption and authentication protocols to protect users. In contrast, storing large amounts of cash at home is insecure, and keeping it in a bank locker often incurs fees.
The significance of credit cards has grown with the rise of digital payments. Not only can you use them for various transactions, but retailers also offer exclusive discounts for online credit card transactions. Beyond being a payment tool, credit cards enhance your spending habits, offering rewards and benefits along the way.
Consider the One Credit Card to enjoy offers in limitless categories. With this card, you can earn 1 reward point per ₹50 spent and 5X points on your top two spending categories each month. The OneCard App is packed with user-friendly features that help you monitor your spending and set daily expenditure limits.
Apply online now and use your credit card to pay for purchases, while enjoying exceptional savings!
