Professional Documents
Culture Documents
IJARSCT
International Journal of Advanced Research in Science, Communication and Technology
(IJARSCT)
Volume 3, Issue 2, March 2021
Impact Factor: 4.819
Abstract: In its earliest form, Commerce was a system of trading of one item or service for another.
Ancient wall paintings and manuscripts show that humans long ago was engaged in trading animal
skins and meat for other services and goods. Thereafter gradually the idea of currency emerged and
in primitive societies people used shells or beads as money. Then with the advancement of
metallurgy, Gold and silver coins became the standard of exchange around 500 B.C and we see that
in Mesopotamia and Egypt, gold bars were used as cash but they had to be measured each time a
trade was made. Thereafter we see that as both gold and silver coins had a standard value
throughout the globe it helped in trade between countries. Thereafter with the development of the
societies throughout the world better systems of settling transactions developed which led to the
development and acceptance of modern day digital payment systems for settling transactions. In this
paper we will study in details the advantages and disadvantages of adopting digital payment systems
and how it had gone to help in development of India. The present study has been exploratory, casual
and empirical in nature and the data needed for research work has been collected by using both
direct and indirect method of data collection.
Keywords: Digital Payment, Internet Banking, Mobile Wallet, Development, UPI, BHIM
I. INTRODUCTION
In 1991 when the World Wide Web was introduced to the world, the world actually had no idea where this new
technology would take us. Now three decades later, it has become almost impossible to visualise a world without the
internet. Information Technology has connected the world in unimaginable ways and has made communication with
any part of the world very easy. In today’s ever busy world it is a relief that instead of wasting one whole day queuing
up in some government office to get a particular work done, one can get it done in few minutes from anywhere just by
having access to a smartphone and the internet and in today’s world we see that technology is in the air, water, food,
education, business, office, electricity, marketing, data storage, communication, travel, banks etc and when we look
arround us we see that some-one connecting with a dear one over the phone, someone talking about a business deal
while the other person is in some other remote corner of the country, someone filling up some application form online,
someone paying his monthly bills sitting right next or someone simply ordering food through their smartphones. Again
today it is possible for various persons to earn degrees through online classes and schools have smart classrooms and
studies are no longer confined to books but are made interesting by YouTube videos and other study portals.
Engineering students who could not make it to the IITs can access lectures of IIT professors through videos. In this
way we see that technology has changed our daily business. One can reduce one’s marketing cost by using online
marketing applications. Today one can sell products on the internet and receive money in the bank directly. One can
research the market, analyse the competitors and learn about technological equipment. Many young entrepreneurs can
be seen actively using the digital platforms for smooth running of their business. In order to properly digitalise this
area, the government of India must ensure proper implementation of various schemes like high speed internet,
affordable data etc. Digitisation will also help restore, conserve and popularise our rich, cultural heritage, whether it is
our language, the dialects or our ancient practices and trades.
The dirtier side of digitisation is that people have become even more exposed to the unsavoury elements on the
internet. The advent of Reliance Jio brought the internet to millions of people across India at an affordable price.
Copyright to DOI: 10.48175/IJARSCT- 1
IJARSCT
ISSN (Online) 2581-9429
IJARSCT
International Journal of Advanced Research in Science, Communication and Technology
(IJARSCT)
Volume 3, Issue 2, March 2021
Impact Factor: 4.819
The recent emphasis on digital payments has made many persons move into the digital transactions band-wagon.
Unfortunately this user growth has not been accompanied by user literacy which makes them vulnerable to any number
of attacks, starting from malware to phishing. Cases of cyber bullying and online harassment are also on the rise.
Digitisation can be boon only when optimally and widely used. The digital transformation of a government can be
challenging, but with proper handling, implementation and use, it can be immensely rewarding & can prove to be a
major factor in the progress of a country.
The Government of India has been taking several measures to promote and encourage digital payments in the
country and as part of the ‘Digital India’ campaign, the Government aims to create a digitally empowered economy
that is faceless, paperless, cashless and at present there are various types and modes of digital payments.
Digital Payment methods are often easy to make, more convenient and provide customers the flexibility to make
payments from anywhere and at anytime. These are good alternatives to the traditional methods of payment and
speeded the transaction cycles. Post demonetisation, people slowly started embracing digital payments and even small
time merchants and shop owners started accepting payments through the digital mode. A digital payment occurs when
goods or services are purchased through the use of various electronic medium. There is no use of liquid cash or
cheques in this type of payment method.
5) USSD : This is another type of digital payment method, & can be used to carry out mobile transactions
without downloading any App. These type of payments can also be made with no mobile data facility. This
facility is backed by the USSD along with the National Payments Corporation of India (NPCI). The main aim
of this type of digital payment service is to create an environment of inclusion among the underserved sections
of the society and integrate them into mainstream banking. This service can be used to initiate fund transfers,
get a look at bank statements and make balance queries. Another advantage of this type of payment system is
that it is also available in Hindi.
6) Aadhar Enabled Payment System (AEPS) : Expanded as Aadhar Enabled Payment System, AEPS, can be
used for all banking transactions such as balance enquiry, cash withdrawal, cash deposit, payment
transactions, Aadhar to Aadhar fund transfers etc. All transactions are carried out through a banking
correspondent based on Aadhar verification. There is no need to physically visit a branch, provide debit or
credit cards, or even make a signature on a document. This service can only be available if your Aadhar
Number is registered with the bank where you hold a account. This is another initiative taken by the NPCI to
promote digital payments in the country.
7) UPI : UPI is a type of Interoperable Payment System through which any customer holding any bank account
can send and receive money through a UPI based app. The service allows a user to use more than one bank
account on a UPI app on their smartphone to seamlessly initiate fund transfers and make & collect requests on
a 24x7 basis on all 365 days a year. The main advantage of UPI is that it enables users to transfer money
without a bank account or IFS code. All we need is a Virtual Payment Address(VPA). There are many UPI
apps in the market and it is available on both Android and IOS platform . To use the service one should have a
valid bank account and a registered mobile number, which is linked to the same bank account. There are no
transaction charges for using UPI and through this a customer can send and receive money and make balance
enquires.
8) Bharat Interface for Money(BHIM App) : This BHIM app allows users to make payments using the UPI
application. This also works in collaboration with UPI and transactions can be carried out using a VPA. One
can link his/her bank account with the BHIM Interface easily. It is also possible to link multiple bank
accounts. The BHIM app can be used by anyone who has a mobile number, debit card and a valid bank
account. Money can be sent to different bank accounts, virtual address or to an Aadhar Number. There are
also many banks that have collaborated with the NPCI and BHIM to allow customers to use this interface.
9) Mobile Wallets : A mobile wallet is a type of virtual wallet service that can be used by downloading an app.
The digital or mobile wallet stores bank account or debit/ credit information or bank account information in an
encoded format to allow secure payments. One can also add money to a mobile wallet and use the same to
make payments to purchase goods and service. This eliminated the need to use credit/debit cards or remember
the CVV or 4-digit PIN. Many banks in the country have launched e-wallet services and apart from banks,
there are also many private players. Some of the mobile wallet apps in the market are Paytm, Mobikwik,
Freecharge, etc. The various services offered by mobile wallets include sending and receiving money, making
payments to merchants, online purchases etc. Some mobile wallets may charge a certain transactions fee for
the services offered.
10) Unified Payment Interface (UPI) : UPI or Unified Payment Interface is a Payment solution developed by
National Payments Corporation of India (NPCI), under the guidelines of Reserve Bank of India (RBI ) and
allows the users to send and receive money between the bank accounts linked with mobile number. The
sending and receiving of money are done on a real-time basis and it does not require the IFSC code but instead
of IFSC code both the sender and the receiver needs a VPA or Virtual Payment Address which is like
yourname@sbi or yourname@icici etc. We can create several VPA using BHIM UPI official android app or
using any of the Indian Banks UPI and link more than one bank account, only we have to link the same mobile
number or SIM which we are using in our smartphone with our bank account as the UPI Payments app will
verify our SIM by sending SMS to authenticate the linked bank account before creating VPA. By integrating
the UPI -API, several digital payment apps have been launched in India and even social media sites like
Twitter or Facebook and several popular messaging applications like Hike messenger is also integrating the
UPI platform for sending and receiving quick money on a real-time basis. Thereafter UPI 2.0 has been
launched by National Payments Corporation of India (NPCI) with some new features which are as follows :
1) The overdraft account i.e credit account can be linked with UPI which was not possible previously.
2) More securely QR code payment by additional signed QR form where no passcode is required at the time of
QR scanning.
3) Pre-authorised Debit mandate to debit the account later which enables banks to create Pay later option at
Payment Gateway.
3.2 Some Security Measures while Making any UPI Transactions on Mobile
1) Not to share the VPA (Virtual Payment Address) ID to an unknown person.
2) As the fraudsters are now-a-days using this method to transfer money from the bank account it is advisable
not to authorise any UPI transaction alert on mobile without carefully examining the source on which way the
money is going as, if the message is showing that someone is requesting money then the UPI linked account
will be debited if we accept the request.
3) Not to install any remote access Apps like any desk or team viewer on the smartphone as this may lead to data
siphoning.
4) We should always try to install the trustworthy Apps and should never install any UPI App which is not
trustworthy.
where services can be utilised by the customer free of cost. Now-a-days various digital payment systems are
bringing down the costs.
3) Waivers, Discounts and Cash Backs: There are many rewards and discounts offered to the customers using
digital payment apps and mobile wallets. There are attractive cash back offers given by many digital payment
banks. This comes as boon to customers and also acts as a motivational factors to go cashless.
4) Digital Record of Transactions: One of the benefits of digital payment is that all transaction records can be
maintained. Customers can track each and every transaction that is made, no matter how small the transaction
amount is.
5) One stop Solution for Paying Bills: Many digital wallets and payment apps have become a convenient
platform for paying utility bills be it mobile phone bills, internet or electricity bills, all such utility bills can be
paid through a single app without any hassle.
6) Helps to Keep Black Money Under Control: Digital transaction will help the government keep a track of
things and it will help to eliminate the circulation of black money and counterfeit notes in the long run and
apart from this it will also give a boost to the economy as the cost of minting currency goes down.
V. LITERATURE REVIEW
Joshi Chetanbhai Mrinal, in his paper Digital Payment System : A feat forward of India, attempted to study the
trend in various modes of digital payments like NFS Inter Bank ATM cash withdrawal NACH, CTS, IMPS, AEPS,
BBPS, UPI, BHIM(UPI) and NETC in last three years. The study has found that during the years 2015-2016, 2016-
2017 and 2017-2018 there has been a remarkable growth in digital payment in both value and volume.
Aydin Gokhen in his paper Adoption of Mobile Payment Systems : A Study on mobile wallets, aimed to understand
the factors contributing to consumer attitude development towards and intention to use mobile payment systems.
Bamastak Omaima of Saudi Arabia in his paper, Explorimg consumers acceptance of mobile payments : An
empirical study, tried to establish that mobile commerce and payment are becoming a critical component of the new
digital economy, where mobile devices are being transformed from simple communication devices to payment
platforms.
Patil Prakash Pushp, Rana Nripendra, Dwivedi kumar Yogesh in their paper Digital Payments Adoption Research.
A Meta-Analysis for generating the effects of Attitude, Cost, Innovativeness, Mobility and Price value on behavioural
intention, stated that the rapid evolution of mobile based technologies and application has led to the development of
several different forms of Dgital Payment Methods (DPMS) but with limited enthusiasm in consumers for adopting
them.
Shankar Amit, Datta Biplab, in their report, Factors affecting Mobile Payment Adoption Intention : An Indian
Perspective, tried to identify the factors affecting mobile payment adption intention in India by proposing a conceptual
framework based on technology acceptance model(TAM).
6.1 Findings
6.1.1 Digital Payment Industry in India
From being primarily a cash obsessed economy, India’s digital payment story is new.Driven by progressive
regulatory policies and increased use of mobile internet, Indian payment industry is going through a transformation
phase & till today it is seen that digital payments has started to pick up pace with the growth of e-commerce companies
followed by the emergence of digital wallet companies to lure the consumers. Thanks to the use of attractive offers and
increased smartphone penetration, the digital wallet companies did find their way to the consumer's phone as well as
their pocket.
To expand their reach, the digital wallets started encouraging customers to use them for offline Point of Sales
(POS) transactions too like at shopping malls, supermarkets, grocery stores, restaurants and petrol stations. The POS
transactions are expected to become a majority contributor to the digital payments platform on the coming years which
clearly shows that digital wallets are playing a unique role in driving the growth of digital payments sector.
The other important pillars of the digital payment sector are the online ticketing, Travel and event companies like
IRCTC (Railways), Make My Trip, Yatra, Ibibo, cleartrip( Airlines and hotels), Trivago (hotels ), Redbus (buses) and
Bookmy Show (movie and event ticketing) have got consumers to transact online.
Prior to sudden developments in late 2016 enabling a massive disruption in India’s Payments landscape it was
estimated that India’s digital payments industry would grow to US$ 500 billion by 2020, contributing to 15% of the
country’s GDP. An important driver of this growth is India’s smartphone user base, which is the second largest in the
world. In addition to private actors, the Indian Government has also pushed several Payments apps including the
Aadhar Payment App, the UPI App, and the Bharat Interface for Money (BHIM) app developed by the National
Payments corporation of India (NPCI).
Such apps make it easier to transfer funds in India’s rural community and more importantly will facilitate a
behavioural change towards greater adoption of cashless services. As such, the digital payments industry represents an
attractive Destinations for foreign investors keen to establish a foothold in India. The use of digital payment methods in
India received a major boost after demonetisation in November 2016. According to the National Payments Corporation
of India (NPCI), the value of BHIM Unified Payments Interface (UPI) transactions skyrocketed to Rs 1 trillion while
the volume of transactions reached 913 million.. This report would lead to think that this massive growth of digital
payment methods would lead to a decrease in the use of Cash. However despite all this the cash in circulation as on
June 22, 2018 was only 9.8 percent more than it was in June 23, 2917, which shows that even though there is a greater
appetite for digital payment system, the Indian economy continues to be heavily reliant on cash and this continued
dependence on cash is largely due to the lack of adequate infrastructure.
In the current scenario, digital payment systems are heavily reliant on smartphones enabled with data connections,
NFC, Bluetooth etc. Out of India’s 800 million mobile phone users only 200 million use smartphones and of these only
6 million are NFC enabled and even smaller percentage of users has access to QR code mechanisms. This means
approximately 85% of Indians who do not have access to the infrastructure need to adopt the current digital payment
systems, which are heavily reliant on smartphones.
Thereafter we see that the hardware and software required to adopt the current digital payment infrastructure is
bulky and expensive and so a lot of retailers are resisting adoption of digital payment due to these high cost and in a
developing country, like India, people would rather carry bulky notes than pay extra just for digital payments methods.
It is also observed that past demonetisation 2016, many Indians switched towards cashless methods, which came with a
hidden cost, but as soon as the pressure reduced they returned to using cash.
VIII. CONCLUSION
We see that still today although Indian economy is a cash obsessed economy, currently with the programme of
regulatory policies and increased use of mobile internet, Indian Payment Industry is going through a transaction phase
and the next few years will see how money will move in the Indian economy.
Here we can say that digital payment systems has started to pick up pace with the growth of E-commerce companies
followed by the emergence of digital wallet companies to lure the consumers. The digital wallets companies gave
lucrative offers and cash back to get consumers on board using the payment channel. Thanks to the ease of use,
attractive offers and increased smartphone penetration that digital wallet companies could make a mark in the Indian
payment scenario. To expand their reach, the digital wallet companies started encouraging customers to use them for
offline Point of Sale(POS) transactions also at shopping malls, supermarkets, grocery stores, restaurants and gas/petrol
stations. The POS transactions are expected to become a majority contributor in the digital payments platform in the
coming years making digital wallets a unique player in driving the growth of digital payments sector. The other areas
facilitating the digital payment are the online ticketing, travel and event companies like IRCTC ( Railways), Make My
Trip, Yatra, Ibibo, Cleartrips (Airlines and hotels ), Trivago (Hotels), Redbus (Buses) and Book my show ( Movie and
Event Ticketing ) and Payment of Utility bills like electricity, mobile and water bills etc.
Therefore in the end we can say that the exponential growth of the digital payment sector is driven by the multiple
factors like convenience to pay, the ever growing smartphone penetration, rise of non-banking payment institutions
(payments bank, digital wallets, etc) progressive lucrative offers and are the key factors that have been driving the
growth of the digital payments in India now and will continue to do so in near future.
REFERENCES
[1]. Joshi Chetanbhai Mrinal , “Digital Payment System : A feet forward of India”, October, 2017.
[2]. Aydin Gokhen, “Adoption of Mobile Payment Systems : A Study on Mobile wallets “, March 2016.
[3]. Bamastak Omaima, “ Exploring Consumers acceptance of Mobile Payment : An empirical study “, January
2011.
[4]. Patil Prakash Pushp, Rana Nripendra, Dwivedi Kumar Yogesh, “ Digital Payments Adoption Research. A
Meta-analysis for generating the effects of Attitude, Cost, Innovations, Mobility and Price value on
behavioural intentions.
[5]. Shankar Amit, Datta Biplab, “ Factors affecting Mobile Payment Adoption Intention : An Indian Perspective.