The Government of India has been taking several measures to promote and encourage digital payments in the country. As part of the ‘Digital India’ campaign, the government aims to create a ‘digitally empowered’ economy that is ‘Faceless, Paperless, Cashless’. There are various types and modes of digital payments. Some of these include the use of debit/credit cards, internet banking, mobile wallets, digital payment apps, Unified Payments Interface (UPI) service, Unstructured Supplementary Service Data (USSD), Bank prepaid cards, mobile banking, etc.
Digital payment methods are often easy to make, more convenient and provide customers the flexibility to make payments from anywhere and at anytime. These are a good alternative to traditional methods of payment and speeden up transaction cycles. Post demonetization, people slowly started embracing digital payments and even small time merchants and shop owners started accepting payments through the digital mode.
Digital payment occurs when goods or services are purchased through the use of various electronic mediums. There is no use of cash or cheques in this type of payment method.
Requirements for Digital Payment Systems
The success or failure of any on-line payment systems depends not only on technical issues but also on user’s acceptance. The user’s acceptance depends on a number of issues such as advertisement, market position, user preferences etc.
Atomicity guarantees that either the user’s on- line payment transaction is completed or it does not take place at all. If the current on-line payment transaction fails then it should be possible to recover the last stable state. This feature resembles the transactional database systems, in which either a transaction is committed or rolled back.
Anonymity suggests that the identity, privacy and personal information of the individuals using the on- line payment methods should not be disclosed. In some on- line payment methods, it is possible to trace the individual’s payment details. In case of purchases using Debit Card, it is possible to find out the purchase details as that information is registered at the vendor and the bank’s databases. So some on- line payment systems like
Debit cards are not anonymous systems. In some other payment systems, anonymity can be weak as the efforts to get the purchase details of the user can be more expensive than the information itself. There are privacy laws in several countries to guarantee the privacy of the user and protect the misuse of personal information by the financial institutions.
As the on- line payment methods are getting more and more acceptance of the users, the demand for on- line payment infrastructure will also be increasing rapidly. Payment systems should handle the addition of users without any performance degradation. To provide the required quality of service without any performance degradation, the payment systems need a good number of central servers. The central servers are needed to process or check the payment transactions. The growing demand for the central servers, limits the scalability of the on- line payment systems.
Security is one of the main concerns of the on- line payment methods and it is one of the crucial issues which decide the general acceptance of any on- line payment methods. Internet is an open network without any centralized control and the on- line payment systems should be protected against any security risks to ensure a safe and reliable service to the users. When users are paying on- line they want to be sure that their money transaction is safe and secure. On the other hand, banks and payment companies and other financial institutions want to keep their money, financial information and user information in a secure manner to protect it against any possible misuse.
As in any other business activity, even in on- line payment methods, the user expects a reliable and an efficient system. Any on- line payment system would fail, despite of it’s advanced technological features, if it fails to get the users acceptance and pass their reliability tests. There are many reasons, which can make the system unreliable to the users. Some of them are Security threats, poor maintenance and unexpected breakdowns.
Usability is an important characteristic of an interactive product like on- line payments. On-line payment systems should be user friendly and easy to use. Any on- line payment system with complicated procedures, complex payment process and other associated complications with the payment environment, can’t get users acceptance. Poor usability of a web shopping or a payment method could also discourage on- line shopping. To make the online payments simple and user friendly, some of the on- line payment systems allow the users to make payments with minimum authorization and information inputs.
- Inter operability
In on- line payment Technologies, different users prefer different payment systems. The different payment systems use different kinds of currencies and the payment systems should support interoperability between them. If a payment system is inter operable, then it is open and allows other interested parties to join without confining to a particular currency. In the real life situation, there should be some sort of mutual agreement between various on- line payment systems to provide the interoperability. Interoperability can be achieved by the means of open standards for data transmission protocols and infrastructure. An interoperability system can gain much acceptance and high level of applicability than individually operating payment systems.
Because of the rapid technological changes, it’s not always easy to get interoperability between various payment systems.