Given the current pandemic situation, future business is tied to cashless payments. The total value of transactions for digital payment in 2020 is $5.204 billion & with the growth rate increasing, this figure is predicted to increase by 2026.
Changes in customer habits, convenience, and COVID- precautions are just a few factors behind the increase.
For every business that is looking to increase revenue in the future, it is essential to offer the option of digital payments to the customers for their comfort & convenience.
The Fundamental Anatomy of an Online or Cashless Transaction
For any digital transaction to occur, defining the fundamentals required for an online purchase is necessary. At the top of every online payment, there are four parts:
- The customer
- The seller
- The bank that issued the card is the one that coordinates the payments from the customer. It usually works with a card provider like VISA/MasterCard to connect a credit or debit card to the customer’s bank account.
- The acquiring bank coordinates accepting payments to the merchant’s bank account.
Here are how these four entities interact during a typical transaction online:
- The client makes an online payment through the merchant’s website.
- Payment is processed upon the secure authentication process using payment gateways in India like Zaakpay.
- The funds are deducted from the customer’s bank account by the bank that issued the account (when customers pay for their charges and in the interim, the “credit” will be extended to the processor)
- The acquiring bank takes the funds and deposits them into the account of the merchant bank.
Best Cashless Payment Methods
Online Transfer – NEFT or RTGS – One of the most efficient methods for cashless transactions is to use online transfer via National Electronic Funds Transfer (NEFT) or Real Time Gross Settlement (RTGS).
Online transfer with NEFT and RTGS is considerably quicker than cheques or DD, and they can be made at any time using the internet.
Buy Now Pay Later – Another method for cashless payments is the buy now pay later option. To use this method, you have to register yourself with any of the third-party providers. Then during checkout, you just have to select the pay later option at the payment gateway.
The merchant will get paid from your provider while no money will be deducted from your account.
However, you will have to repay your provider within a fixed period. This method of paying is becoming increasingly popular as customers get a running line of credit which they can use to make purchases even if they don’t have cash on them at that moment.
Debit or Credit Cards – Debit or Credit card is another alternative to the cashless payments method. The use of credit cards and debit cards was limited in India. However, their usage is growing with time.
The customers just have to swipe their card details while making purchases & their information is securely processed.
Mobile Wallets – Another method for cashless payments is a mobile wallet. You don’t need an account with a debit or credit card or online banking password to pay through a mobile wallet.
Load funds into your wallet using Immediate Payment Service (IMPS) and use it while on the go. It is possible to download a mobile wallet app from the Play or App Store. You can integrate mobile wallets for transactions using payment gateways in India like Zaakpay.
eWallets – eWallets are one of the best cashless payment methods for transferring funds or for online shopping. An eWallet is a method to buy anything from groceries to booking flight tickets.
To use eWallets, merchants and customers require smartphones connected to the internet. After registering for an eWallet, you must link your debit or credit card to your eWallet ID and start using it for making payments for every big and small purchase.
Aadhaar Pay System with Enabled Payment – Aadhaar Enabled Payment System (AEPS) is among the most convenient cashless payment options. AEPS is similar to Micro ATM; it uses a smartphone and a fingerprint scanner to complete the transaction.
To use this service, it’s necessary to link the Aadhaar credit card with your account at a bank. You can utilize AEPS to make Aadhar to Aadhar fund transfers, cash withdrawals, cash deposits, etc.
UPI Apps – Unified Payments Interface (UPI) is a mobile payment system that lets you perform various financial transactions using your mobile. It allows you to transfer or receive money via the virtual payment address without entering the bank details.
Merchants can sign up with banks to accept payments made using UPI. Zaakpay provides one of the best payment gateway options for UPI transactions.
Benefits of Cashless Payments
Security – Digital payment options are secured with different levels of encryption and authentication. The majority of payment methods have two-factor authentication (TFA) to provide an additional level of protection. Additionally, it’s simpler and more secure to carry a smartphone than carrying cash in a purse.
Discounts – The government has decided to provide discounts and incentives to make online payments to encourage cashless economics. For example, the government now offers exemptions for cashless transactions used for tax payment and the purchase of fuel tickets for trains or tickets for highway tolls and insurance plans.
Convenience – The ease of receiving and making payments is the main reason in deciding whether to use digital payments. Payments made online eliminate the need to carry cash around and help save time since customers and business owners do not have to wait for ATM services.
Payment applications also allow you to monitor your inflow and outgoing money and are useful when filing a tax return.
Conclusion
A cash-free world appears to be several years away.
However, a significant FinTech technological advancement through organizations like Zaakpay, the best payment gateway in India, could reduce this timeframe with the advent of cutting-edge technology and the continuous development of existing technology.
This could result in faster, more transparent, and more secure payments of cashless payments more than ever.