‘Digital India’ terminology:
The Government of India’s strategic de-monetization movement in November 2016 has positively encouraged all to head towards a cashless society. The ‘Digital India’ terminology went viral and thus introduced us to Digital money. The country has remarkably witnessed almost a 300% increase in digital payment activities ever since then. According to the Central Bank data, Digital transactions registered an upright 40% growth. Card payments soared to 39.1% while usage of Point of Sale machines increased to a whopping 41%.
What is Digital Money?
Digital money implies to a purely electronic mode of payments. Unlike the tangible modes, like a Currency note or coins, digital money is accounted for and transferred through computers. A Digital money exchange takes place with the aid of smartphones, credit cards, and the internet. Digital money allows for prompt transactions and borderless transfer-of-ownership. It can be turned into physical money by withdrawing cash at an ATM.
Why Digital Money?
The ease and speed of payment is the key advantage of digital money. The digital channel provides more flexibility of transaction. As payments are processed through secured servers, the risk for users is reduced. Furthermore, there is no need of standing in long ques outside ATM centers for withdrawing cash. No fretting about cash run-outs. You don’t have to wait until cheque clearances and can happily avoid carrying hard cash along in wallets.
Types of Digital Money:
Presently, available cashless payment systems include credit/debit cards, e-wallets, Unified Payment Interface (UPI), online banking, etc. The tech-savvies, as well as the less technically inclined, can make use of the various available means of digital payments. These are easily available and accessible anywhere and anytime. Let’s take a look at the popular few:
UPI Apps: UPI or Unified Payment Interface is a mode which is used to make fund transfers through a mobile application. The user can download any available UPI app and transfer money without any geographic limitation and without having to fulfill any list of formalities.
AEPS: AEPS is an Aadhar based digital mode of payment. If the user has his Aadhar card linked to his account number he can send or receive funds with ease using the point of Sale machines. It uses the account holder’s finger imprint for verification and hence is the safest and secure mode of all.
Cards: Credit Cards/ Debit Cards are the most preferred modes of payment to pay at portals or on E-commerce sites. This mode can be used when one shops online or offline in a physical store provided the merchant has a POS machine to facilitate the swipe. The transaction is instant and is secured with a PIN that the user needs to punch for the payment.
E-wallets: E-wallets act as a bank account where you store a specified amount of money. You can use this for your purpose as and how required. E-wallets passbook perfectly records every transaction big or small and keeps you well updated about expenditures.
Internet banking: Internet banking can be accessed from your desktops as well as your smartphones. You do not need a card for the transaction. You can conveniently transfer funds across the country through the NEFT/IMPS or RTGS transfers.
Undoubtedly, the Digital payment space is evolving day by day, with various players invading with technology and expertise. In 2015-16 a total of Rs. 4018 billion transacted through mobile banking as compared to Rs. 60 billion in 2012-13. (Data Ref- Reserve Bank of India). That is an unbelievable 67 times growth. Presently, there is a significant rural-urban rift in digital payments adoption and usage. However, The Future of this digital revolution still looks real bright.
Future of Digital Money:
The speed at which the number of smartphone users is increasing, there is no denial about the digitization becoming the way of life. Furthermore, the Government’s tax benefits, smart phone money applications, Fintech start-ups, liberal Banking are all encouraging the cashless drive. Finally, with the degree of penetration and increasing transactional value it is very clear that adoption of digital payments will enable a seamless payment experience. We are sure to witness India’s accelerated journey to becoming a digitally powered economy.