Brief Introduction about Digital Payments
A Digital payment, also called as Electronic payment is defined as transfer of value using a digital device . What are the reforms that could be brought in digital payment system to make payments more convenient ? This transfer of value or money could takes place using various medium like point of sales of computer , mobile devices ,UPIs ,Internet banking ,Banking cards and many more
Digital mode of payments have made transaction convenient over the years . India has surpassed countries like China and USA in terms of Digital transaction .India recorded about 25.4 Billion digital transaction in year 2020 as per Government reports . This number is all set in increase in coming days as well . Having said that , some reforms could be brought in digital payment system to make payments more convenient .We will discuss them further .
Need for Reforms in digital payment system for its convenient execution
The recent pandemic has dramatically increased industry’s shift for digital payments . It made important for financial institutions to consider technological innovations . It included easier way of payments done by digital mode . Major giant like Accenture forecasts total transaction of about 48 trillion dollars
will shift from cash to card in next 10 years . In order to make digital payment system more convenient ,financial institutions have stepped up with digital innovations and transformation .
Making Digital Payment system more valuable and promotion of Digital Payments
Major reforms should be brought in Digital payment services . It should be providing more value to cashless payment . There fore Digital payments system offer clear advantage over using cash transaction . Along with adding values ,Digital payments system should be low cost for most of the people . Promotion of digital payment gateways are already being pushed at government level . Convenience fees have been withdrawn by many organizations or government organization through digital payment system . Several Government authorities in collaboration with Ministry of IT should have focus on developing ‘PayGov India’as unified portal across central and state governments collection purposes . All other important organizations should be promoting digital payment
Reforms like Proactive integration of cybersecurity feature is required in digital Payments to make system more convenient
Digital payments have reached to its peak during pandemic . Be it people or any organization , everybody needed contact less transaction if possible . But with increase in Digital payments all around , so as cyber fraud . Cyber criminals may target the channels and attempts fraud leaving transactions in risk . In order to Digital payment providers along with banks should come up with a proactive integrated techniques . There fore such severe issues could be avoided .These proactive integration features should be able to invest in risk analytics and machine learning features .
Developing countries like India on a roll in digital payment system to make payments more convenient
If we talk about country like India , which has seen a tremendous surge in terms of digital payments over the years .Let us understand it from government data . As of august 2021 only UPI (Unified Payment Interface) has about 22+ crore users in India . They did a total transaction of 6.39 lacs crore transactions . UPS’s sharp growth has predicted India’s ability to build a world class payment infrastructure . A major reform occurred once this Unified Payment infrastructure have been adopted
by around 200 Indian Banks . The open system of UPI interface has also enabled global giants like Google ,Amazon Whats app to provide their UPI services . Still lot of reforms need to be introduced in order to make country a cashless economy .
Customer education could be one of major reform to build their belief on digital payment system .
There are still majority of people around the world ,who are hesitant about transactions through digital payment systems . Many organizations along with Government body should come forward to educate such customers . Customers need to be taught to keep their sensitive information strictly confidential to avoid any fraudulent activities .
What are the reforms that could be brought in digital payment system to make payments more convenient ? Reforms in Cross border settlements is required in digital payments to make system more convenient
International settlements or money transactions contribute to around 20 percent of GDP of many important countries . Many important regulations are needed in cross border transactions .
Hence many countries need to draft few policies in order to make these transactions in a convenient way . The average cost of Cross border remittance should be targeted up to 3 % which stands currently at 7 % for the united nations .
Reforms required in sound legal and Regulatory frameworks of digital payment system
Digital payments regulatory frameworks should give clear definitions of the places and liabilities of various parties involved in the payment system . It includes which laws and regulations apply to each of these, and how any applicable administrative authority may conduct applicable oversight . Overall fiscal regulatory fabrics should also look to implement payment-related rules in a coherent manner . In some cases, particularly around-payment service inventions, different regulatory authorities may require specific information . but it needs to be united with each other in order to avoid further fragmentation . The WTO’s (World Trade Organization) armature provides the introductory foundation for all bilateral and indigenous trade deals. Where efforts concentrate on regulatory stylish practices for an open and competitive -payments terrain, rather than Request access, these could ultimately be taken up on a country-by- country base. A common frame of regulatory principles – with those listed above serving as a non-prescriptive illustration to frame this thinking agreed among several nations could help to underline any applicable services market access commitments made.