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Online Payment Methods before & after Covid

Submitted to

Prof. R.N.Subudi

KIIT School of Management

27th March,2022

By

Abhinav Das (21202002)

Akash Kumar Sahu (21202011)

Rikita Sethi (21202058)

Sourav Bose (21202070)

Sweta Shibangi Mohanty (21202071)

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Executive Summary

India is on its way to become cashless. The Indian Government has started the Digital India

Campaign to lessen the Indian economy’s reliance on cash and to combat money laundering.

Various payments methods are emerging and evolving in order to make India cashless and to

increase trends in using digital payment systems. In 2010, a variety of payment products (stored

value cards, wallets, recharge coupon etc.) were introduced. The study’s purpose is to look at the

online payment methods of people pre-& post covid 19. The study also attempts to explain the

future scope of the digital payment system.

Introduction

Digitalization is necessary for the country to improve the financial sector in accordance with the

modern-day requirements and to compete with the emerging countries. The digital payment

system is rapidly becoming an indispensable component of financial transaction. Demonetization

in 2016 by government have accelerated the growth trajectory of the cashless India mission. Our

Prime Minister Narendra Modi launched the Digital India Campaign in 2017 to promote cashless

transaction, reduce the use of paper which would help in protecting the environment and to

eradicate the hidden or the black money from the country. SBI created Green Channel in 2011 to

promote digital systems and to safeguard the environment.

Objectives of the Study

 To study the concept of Digital payment system.

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 To know the impact on Digital payment system before and after Covid 19.

 To know the advantages of the digital payments.

 To know about the opportunities and challenges of online payment systems in India.

Research Methodology

The methodology used for this study is secondary data based and it is a conceptual paper

on Online Payment Methods Pre-& Post Covid 19.

Literature Review

Due to the Digital India Campaign and Digitalization traditional system of payments are

being replaced by the digital systems. The most important reason for people to switch

from traditional system to the digital methods is because the traditional systems have

many loopholes and were somewhat insufficient which was overcame by the digital

systems. The traditional systems of payments include Cheques, bank drafts, money

orders, letter of credits etc. Some of the common digital payment system used by Indians

are: Debit Cards, Credit Cards, UPI, Internet Banking, Mobile banking, E-Commerce

payment etc.

Some of the common digital payment methods are as follows:

1. Banking Cards: The banks provide variety of cards to reduce the time of financial

transaction. There are several varieties of cards such as Rupay, MasterCard, Visa etc.

These cards offered by banks provide more security, convenience and easy to use than

any other payment options. These cards allow individuals to buy goods in both
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physical and online shops through mail order catalogues and over the phone. This

helps in saving both client as well as merchant’s time and money allowing them to

conduct transaction more easily.

2. UPI: Unified Payment Interface (UPI) is digital payment system which allows us to

combine numerous bank accounts into a single mobile application combining many

banking functions. It is used to send and receive money as well as make and receive

bill payments. It is very intriguing and simple to use. It doesn’t require one to

remember the beneficiary’s account number of IFSC code to make or receive

payments. One just need to know the beneficiary’s registered UPI mobile number and

could directly make payments.

3. NEFT: National Electronic Fund Transfer (NEFT) is a national wide payment

system that provides money transfer from one bank of any branch to any individual,

firms or corporation that has account in different bank in the nation. The cash

transaction in NEFT has a limit of Rs. 50,000/- Utilizing this service a person can

deposit money up to Rs. 50,000/- One can avail the NEFT service only during the

business hours of the bank.

4. RTGS: Real Time Gross Settlement (RTGS) is a method of individual fund transfer

on an order by order basis. The term ‘Real Time’ refers to the processing of

instructions as they are received rather than at a later time because the money
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settlement occurs in the books of the Reserve Bank of India. The payments made

through RTGS are final and irreversible. This method is used for transferring huge

sum of money. Customers can send as little as Rs. 2lakhs to as much as Rs. 2crore

using RTGS. It can only be used during the working hours of the bank.

5. IMPS: Immediate Payment Service (IMPS) is a mechanism for immediate

transferring money throughout India through mobile, internet, and ATM. It offers an

interbank electronic money transfer that is available 24 hours a day and 7 days a

week. It is both safe and cost effective.

Advantages of Digital Payment System.

1. Digital Payments are convenient and time saving.

2. It can used by the individuals from anywhere at any time. So, one doesn’t have to

run to banks every time for transactions.

3. Digital Payment Systems includes digital wallets which make payment easy and

the customers can even get cash backs and discounts with the digital wallet.

4. The transactions made digitally are automatically recorded in our e-wallet app

this helps in keeping track of the records and spending.

5. Digital payment systems provide securities for every transaction like MPIN or

OTP which can avoid frauds.

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Barriers to Digital Payments

1. In India people still use the traditional method of currency note money because they

find it is much safer than the digital payments.

2. Due to the high rate of illiteracy in India, individuals have been unable to understand

how to utilize the digital payment system.

3. Many individuals in India still doesn’t use e-wallets and digital payments for money

transfer instead they use ATM cards to withdraw money and give it to someone.

4. Because of a lack of expertise in Digital Payment Systems, many people are unable

to use this service.

5. Private Sector banks are ahead in digitalization than public sector banks.

Individuals' payment habits prior to the pandemic.

Despite the fact that digitization had begun in India in 2017, people were not particularly

interested in it. Only a small percentage of people use the digital option for financial transfers

and transactions. The only digital means of transaction they would utilize were ATM cards to

withdraw money. Individuals preferred cash in hand and cash payments over digital ways

because they believed it was safer and more secure. Despite the fact that some individuals have

e-wallets and other digital payment apps, many still prefer to pay using cash. Despite becoming

digitalized, individuals still used traditional payment methods such as checks, draft, cash, and so

on.
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Individuals' payment habits post pandemic.

The Covid-19 pandemic has caused a behavioral shift in the payment methods of the individuals.

People now preferring to make digital payments. Due to the pandemic people were forced to

withdraw large amount of money from the ATMs in order to prevent frequent visits and the cash

so withdrawn are kept for the emergency and the payments are made frequently via UPI and

other digital forms. Because of the increased use of digital payment systems during the

pandemic, they were made even more secure, effective, convenient for using, and swift. People

learn how to use digital payment systems and the advantages they have over traditional methods.

When used for transactions, UPI and money wallets even provided several discounts and

coupons. This also attracted people's attention.

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References

Last Name, F. M. (Year). Article Title. Journal Title, Pages From - To.

Last Name, F. M. (Year). Book Title. City Name: Publisher Name.

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