An electronic payment sometimes called a digital payment is a good alternative to traditional methods of cash payment and speeds up transaction cycles from person to person, person to business, person to government, Government to person, business to business, business to Government, etc. “Faceless, Paperless, Cashless” is one of the professed roles of the Digital India programme.
ACI Worldwide reports that India is a global leader in real-time payments, with a significant share of global real-time payment transactions. In 2023, India accounted for about 49% of global real-time transactions, making it the world’s largest market for real-time payments. This dominance is largely attributed to the success of the Unified Payments Interface (UPI), which has revolutionized digital payments in India. According to ACI Worldwide, digital payments in India are set to account for 71.7% of the total payments volume by 2025, leaving cash and cheques at 28.3%. It further said that in respect of real-time online transactions in 2020, India is ahead of the top 10 countries such as China, the US, South Korea, Thailand, the UK, and others countries. The National Payment Corporation of India (NPCI) states in its key findings of 2020 that “Overall one-third of Indian households are using it in some form or the other”. Almost a quarter of the households in the bottom 40% income group are using digital payments as well and it has not remained a rich or well-educated person’s preserve, and 15% of households in the bottom and middle categories would like to adopt digital payments, it said.
Benefits of Electronic Payment Systems:
Convenience:
EPS allows for quick and easy payments anytime, anywhere.
Security:
Many EPS use encryption and other security measures to protect sensitive financial data.
Speed:
Transactions can be completed quickly, eliminating the need for waiting in lines or mailing checks.
Cost-Effectiveness:
EPS can reduce transaction costs compared to traditional methods like cash or checks.
Sustainability:
Reducing reliance on cash and cheques contributes to environmental sustainability.
Here’s a breakdown of different types of EPS
| System | Type | Operated By | Purpose / Use Case | Key Features | Settlement | Timings |
| NEFT (National Electronic Funds Transfer) | Retail | RBI | One-to-one fund transfers across banks | Available 24x7x365, operated in half-hourly batches | Near real-time, batch-wise | Continuous (every 30 mins) |
| RTGS (Real-Time Gross Settlement) | Large-value | RBI | High-value transactions (min ₹2 lakhs) | Real-time, immediate settlement | Real-time, gross basis | Available 24x7x365 |
| IMPS (Immediate Payment Service) | Retail | NPCI | Instant interbank fund transfer | 24×7, even on holidays; mobile & internet-based | Real-time | Instant |
| UPI (Unified Payments Interface) | Retail | NPCI | Instant fund transfer via mobile, using VPA (Virtual Payment Address) | 24×7, highly popular, supports P2P and merchant payments | Real-time | Instant |
| AEPS (Aadhaar Enabled Payment System) | Retail | NPCI | Fund transfer/authentication using Aadhaar and fingerprint | Used mainly for financial inclusion in rural areas | Real-time | Instant |
| NACH (National Automated Clearing House) | Bulk | NPCI | Bulk, recurring payments like salary, pension, dividends | Automated, supports both credit and debit mandates | Deferred (batch mode) | As per schedule |
| ECS (Electronic Clearing Service) | Bulk | RBI / Banks | Older system for bulk payments like interest, dividends, EMI | Being phased out in favor of NACH | Deferred (batch) | Scheduled |
| NETC FASTag (National Electronic Toll Collection) | Toll collection | NPCI / NHAI | Electronic toll payments via RFID tags on vehicles | Linked to prepaid or bank accounts | Real-time | Instant |
| BBPS (Bharat Bill Payment System) | Retail | NPCI | Bill payments – electricity, telecom, gas, etc. | Interoperable, agent-assisted and online | Real-time | Instant |
| Prepaid Instruments (PPIs) | Retail | RBI-licensed Entities | Wallets, gift cards, transit cards | Used for small-value, non-cash payments | Real-time or deferred | Varies |
To know more read : ELECTRONIC/DIGITAL PAYMENTS:THE 45 TYPES OF DIGITAL PAYMENT SYSTEMS IN INDIA
Related Posts:
