Top Payment Trends in the Digital Landscape

India has experienced some amazing shifts in the digitization of payments over the last two years. Demonetization brought about a strong impetus for consumers to switch to cashless methods of payment. There has been an increase in adoption of digital instruments which have been aided by a rise in merchant outlets, and proliferation of UPI which has simplified money transfer to banks. Merchants accepting card payments have increased by twice as many coming to about 3 million merchants with the number of UPI transactions rising up to 250 million in June 2018.

What’s interesting is that a major portion of the activity in digital payments has been led by non-banks. E-wallets and payment gateways in India have gained significant prominence. Digital payments are expected to evolve rapidly in the next few years to overtake cash spending by 2020. 

Below are the top 5 trends that will drive this change:

  1. UPI

The technology underlying UPI enables instant payments from one bank account to another and is path-breaking. Users are often inconvenienced when they have to log into websites or apps VPAs. Third party providers who offer payment apps on top of UPI using open APIs make this process convenient and almost invisible. This enables many consumers to access UPI and use it for peer-to-peer payments.

  1. QR code

With the use of the QR code technology for digital payments at merchant outlets, the need for expensive EDC (electronic data capture) machines or NFC (near-field communication) devices is eliminated. This improves the economics of merchant acquiring. A rise in merchants accepting non-cash payments is expected owing to this advantage. Mobile phones will be the device of choice for payments using QR codes. Traditional acquiring models will get disrupted, and new-age acquirers will offer value added services to merchants in order to make acquiring business economically viable.

  1. Zero transaction fees

Government incentives and competitive forces are driving the economics of payment transactions to a decline. The RBI (Reserve bank of India) has capped merchant discount rates for debit card transactions at 0.4%. Most fintech firms are giving their payments services for free. This downward trend is expected to continue and will lead to payments being offered for free with players looking to monetize data through sale of other financial and non-financial products.

  1. Cybersecurity

With greater focus being placed on customer acquisition and driving adoption of digital payments, risk management and fraud control haven’t been as stringent as they should be. Cyber-attacks have been reported to have caused alarming financial damages of more than $500,000 to Indian companies in the last 12 months alone.

It is imperative for digital payments players to embrace new technologies like bio metric authentication, AI, ML and pattern matching for real-time fraud prevention for digital payment transactions.

  1. Payments space

A large number of new players have ventured to join the space of payment gateways in India in the last couple years. Some of them offer niche solutions. From the perspective of consumers ubiquity is important, as they look for instruments that can be used for both purposes online and offline.

This space is expected to witness consolidation with a few large players dominating the market in the coming years.

Benefits of having an online payment gateway with UPI

Unified Payment Interface (UPI) is among the most advanced method of payment among all the options available for digital commerce.

This payment mechanism allows instant money transfers without bank details. It does so using a virtual payment address.  In this article we look at the benefits of UPI:

1. Cheapest Way of Money Transfer

UPI is the most economical method for fund transfer. The nominal charges make UPI a strong way to promote non-cash transactions of small amounts.

2. Secure

UPI minimises and mitigates cyber security concerns. Since bank details and information isn’t requires for payments using UPI the risk of them being hacked is eliminated. Also the authentication takes place at your smartphone. The level of security is increased by using two different PINs. You can easily make it discrete while typing at your smartphone.

3. One UPI App Many Accounts

When you use an online payment gateway that has UPI as a feature, you no longer need multiple apps for different bank accounts. A single UPI can be used to access many bank accounts.

4. COD Without Paying Cash

About 80% people choose the option of cash on delivery while shopping online. Behind this choice lies a simple apprehension about being delivered the wrong product. Also for expensive purchases you may not always have cash on hand or an ATM nearby. UPI puts an ends to this hassle. With UPI you can choose the COD option without actually paying in cash and using the instantly UPI fund transfer. Of course the merchant should be using the UPI fund collection facility as well.

5. Immediate Payee Registration

Usually a waiting period is required before you can make transfers to a new payee online. This time could be from half an hour to up to 48 hours. UPI requires no waiting time, so an online payment gateway with this feature is the most preferred choice for e-commerce businesses.

Owing to the many advantages relating to cost, efficiency, ease for customers, and highly secure nature of transactions that UPI brings, it is the most coveted feature eCommerce owners look for while choosing an online payment gateway. If you are in search of a payment provider for your online business or are looking to change from your existing one, take care to check for the UPI feature before you finalise your decision.