Different Types of Digital Payment Methods
The popularity of digital payments and remittances is on the rise. Whether it is e-commerce, international payments, or money transfers, there is a wide spectrum of options available for consumers. All the payment options that are openly and readily available nowadays have mainly found their origination under the vast umbrella of customer services. With more and more businesses and startups pouring into fintech, improved customer services and efficient systems have become a must.
What are Digital Payments?
Digital Payments or Electronic Payments are payments that are cashless and mostly contactless. These payments are implemented using digital platforms, such as electronic wallets, Buy Now Pay Later, Touch and Go, etc.
Since the pandemic, the adoption rate of digital payments has surged tremendously with the number of e-payments increasing by more than 300 billion in number since 2020. The pandemic has propelled the fintech industry unbelievably.
Different Types of Digital Payment Methods
With more participants entering the industry and a heavy focus on improving customer services, fintech has witnessed an astronomical evolution in the past few years, vis-à-vis digital services, including payments. With most big and small companies providing contactless and cashless payment options, the methods of conducting payments have changed immensely. Read on to see which payment options are gaining ground nowadays:
Credit and Debit Cards
MasterCard and Visa have been the long-standing key players in the financial world. Even with the banking and financial sectors taking a digital turn, this payment method still predominates owing to its familiarity and well-established reliability.
UPI (Unified Payment Interface)
UPIs are payment interfaces that allow customers to make transfers from one bank to another. With simple onboarding procedures, including KYC, UPIs provide cashless and contactless options, that are carried out directly from bank accounts, making them secure and reliable.
E-Payments from Banks
Digital payments using banking portals are also reliable options that are mostly used to make international transfers and payments.
– Online Banking- Net banking or online banking allows users to make transfers and payments using their bank accounts by accessing them online.
– eChecks- Electronic checks are prevalent in the US and they are mostly used for making international payments, where the entire process is built on the same concept as traditional checks but is faster.
– Small Credits- Banks partner with third parties to provide credit options to customers, where they can choose to pay in installments or some time at a later stage for their purchases. EMIs (Equated Monthly Installments) and BNPL (Buy Now Pay Later) are examples of this method.
e-Payments Using Mobiles
With the upsurge in the adoption and use of mobile phones, fintech companies have revolutionized payments by providing different payment options that customers can choose from according to their requirements and suitability.
– Applications- There are innumerable mobile applications that enable e-payments by linking the user’s cards, bank accounts, e-wallets, or UPI to enable quick payments and transfers.
– QR Codes- Unique QR codes are provided by mobile applications, UPI servers, etc., for users to scan these codes using their devices and make payments using different options like online banking, UPI, and mobile wallets, etc.
– Biometric Verification- Biometrics is a newer technology that has started making rounds in the fintech spectrum, where customer verification is done using registered biometrics to carry our payments.
– E-Wallets- Digital wallets allow users to store their digital cards or bank details safely, using e-wallet applications. Users have the options to use their cards, or bank accounts, for contactless and cashless payments using their phones.
The Internet of Things
With fintech broadening its horizons to include digital objects, the internet of things has also taken the world by storm.
– Smart Speakers- Internet-enabled smart-speakers like Google Home, Amazon Echo, Apple Home Pod, etc., are connected to the users’ smartphones via Bluetooth, allowing them to converse and make purchases without even operating their phones.
– Smart Watches- Smartwatches too are connected to the users’ smartphones enabling them to make payments through them.
NFCs
Near-field communication is a technology similar to Bluetooth that connects devices in defined proximity. This cashless technology uses a chip system where devices are connected to make payments and transfers. For example, multi-utility stores have payment devices that allow customers to touch their cards instead of swiping and entering their passwords, making it quicker and more efficient.
Cryptocurrencies
Cryptocurrencies are decentralized currencies that are secure and not governed by any agency. These currencies operate and are stored in digital journal ledgers called blockchains. As these currencies are decentralized, they allow easy international transfers, especially for large amounts, which would otherwise not be possible.
The Takeaway
With the extensive downpour of fintech technologies disrupting traditional systems, the world has witnessed incredible change in the way we bank, purchase and pay. The wave of fintech has just started rising in the past few years, and it is a long projection of which trends and technologies would eventually become our future. Most of us have come across and used one or more of the technologies mentioned above. It is only with time that we would be able to evaluate which ones are most user-friendly, practical, and secure.
