A Useful Guide on Digital Payments: The meaning and types

Updated on: 17 Jul 2024

From paying your electricity bill, booking flights online or shopping at your favourite clothing brand, a digital payment makes the process quicker and more convenient. Also known as electronic payments or e-payments, it helps you make payments online from your cards, mobile phone or PC.

In these types of payments, the payer’s bank deducts the payment and acts as the starting point of the journey. The payee’s bank receives the funds almost instantly, completing the payment process. Know various types of digital payments and the methods to pay for purchases conveniently.

Types of Digital Payments

Now that you have an idea of what is a digital payment, here are the various types:

Unified Payments Interface (UPI)

In 2016, the National Payments Corporation of India (NPCI) introduced UPI. Through this method, you can make various payments instantly within a few seconds. You pay directly from your linked bank account without the need to enter the card or bank details again and again. These apps give each user a unique ID and QR codes for easy and secure transactions.

Credit, Debit and Prepaid Cards

One of the most commonly used payment options are banking cards, which include:

Debit Cards: The amount is deducted directly from your bank account.
Credit Cards: The amount is deducted from the credit limit assigned and you must repay the utilised amount to restore the limit.
Bank Prepaid Cards: These need to be loaded with funds beforehand and you can use them as you want.

Also Read: Difference Between Credit Card & Debit Card

Mobile and Internet Banking

Also called net banking, it allows you to make transactions electronically if you’re a customer of a bank or other financial institution. You can easily transfer funds or make payments via various digital payment banking modes like:

National Electronic Funds Transfer (NEFT)
Real Time Gross Settlement (RTGS)
Immediate Payment Service (IMPS)

Also Read: IMPS vs NEFT

You can also use these platforms and mobile apps for other services that are non-financial in nature, such as:

Viewing account statements
Requesting new chequebooks
Checking account balances

Mobile Wallets

E-wallets or digital wallets are common ways for online digital payment banking. You can make payments for various purchases and bills more seamlessly through your mobile phone. You can even transfer funds to your friends or family within a few seconds. You can link these wallets to:

Savings account
Debit card
Credit card

Point of Sale (PoS) and E-Commerce

It is a device in retail stores that helps you make electronic payments. Whenever you pay via your debit or credit card in stores, it goes through this machine. Besides these, there are also mobile and virtual systems.

Bharat Bill Payment System (BBPS)

This is a system that lets you pay bills online quickly, securely, and easily. The Reserve Bank of India (RBI) introduced it, and the NPCI is responsible for managing it. Some of the bills you can pay are:

DTS
Postpaid mobile
Gas
Electricity

Aadhaar-enabled Payment System (AEPS)

NPCI launched this system to use Aadhaar authentication for the purpose of banking. You can use your Aadhaar-enabled bank accounts for:

Digital fund transfers
Digital payments at PoS (Point of Sale) terminals
Payments at micro-ATMs

Unstructured Supplementary Service Data (USSD)

With USSD, you can carry out mobile banking transactions even without an internet connection. You simply need to dial *99# on any mobile phone. All Telecom Service Providers (TSPs) support this method to enjoy various services, like:

Request for balance enquiry
Interbank account-to-account fund transfer
Getting mini statements

Apply for Digital Loan

Benefits of Digital Payments

Here are some of the pros of digital payments banking:

Enables you to make transactions within a few seconds from any device
Uses encryption and authentication to enhance security and prevent fraud
Provides records of transactions for better transparency and financial management
Minimises the risk of physical theft by handling transactions digitally
Provides discounts and cashback on transactions which helps enhance savings
Typically involves lower transaction fees compared to traditional banking

If you prefer electronic payments, consider getting the Fibe Axis Bank Credit Card. With this card, you can make various payments or purchases with just a single tap. You can also link this card with all UPI platforms and apps for quick and easy payments.

In addition to a seamless payment experience, you enjoy a wide range of features and benefits. These include cashback on transactions, discounts on shopping, complimentary airport lounge access and more. Download the Fibe App or apply for the card through the website without any hassles.