Digital Payment Meaning, Method and Mechanism
Digital payment is a method in which physical currency is not used. In this method, payment is made in digital mode. For this kind of transaction, we need online banking facilities such as net banking, e-wallets, credit card, etc.
For example, if we want to pay an amount from our bank account directly, then we need to approve the beneficiary bank account number. Then the bank will debit the same amount from our account and submit it to the beneficiary’s bank account. This whole process takes just a couple of seconds. The best part is that this entire process is monitored and performed by an automated system.
There are certain conditions for using a digital payment facility as given below:
- The sender and receiver both should have a digital payment facility. For these, both parties must have specific eligible devices or applications.
- In the case of net banking, we need bank permission.
- Our mobile number or email should be registered with the digital payment provider.
- Good speed internet and the eligible device is required.
- Basic training is required.
- Users should be aware of and maintain security protocols.
- Always use a safe and trusted Digital payment provider.
Different Types of Digital payments:
In this method, we need a physical bank account. The net banking facility is provided by the concerned bank. It may be free or chargeable. With this facility, we can transact payments in bank accounts only. The steps are given below:
- Login to Netbanking.
- Go to the payment transfer option.
- Select the beneficiary account.
- Enter the amount.
- Enter the password, or OTP received.
- Confirm the transaction.
- After this, the amount is debited from our account, and we will receive a confirmation notification.
- Log out from net banking.
- In case of transaction failure, the amount will be returned to our bank account.
This whole process is online, so there is no need to go to bank. No human assistance is required, and significantly less time is used. All the transactions are monitored, and records are saved.
This is similar to net banking. In this, we use a mobile app for operations. The process is identical to net banking.
These are like virtual digital wallets, in which we can carry the amount in digital format. We can transfer the required payment from our bank account. Once the money is added, we can use the payment method provided in the app for a transaction. Like scan QR codes, transfer to bank accounts, UPI, mobile number transfer, etc.
For each transaction, a password or OTP is required.
Paytm, Mobikwik, Razorpay, Amazon pay, etc., are some examples.
These are banks with no physical properties like Paytm Bank.
The functions are similar to an actual physical bank.
We need to submit the amount online from our physical bank account.
These banks give their users a specific account number and IFSC code, which can be used similarly to a real bank account. This means we can use this account for receiving salary too.
Credit or pay later cards:
We all know credit card and their uses. Pay later is a card that allows you to make payments even if you don’t have any money in your bank accounts. These cards come with pre-approved limits. The deducted amount needs to be repaid on the bill date. For these transactions, a password or OTP is required.
Digital payment facility is beneficial in today’s time. We need not carry physical cash. Almost everywhere, digital payment is accepted. The user needs to go through a bit of training to use these.