Which digital payment method to use? Here’s how to choose

Although we've welcomed the new year 2017 and cash crunch is some what eased but since November 8, every Indian has only one thing on mind: the dilemma of choosing a safe, secure, convenient and cashless payment option. Currently available cashless payment systems include

• Credit/debit cards


• e-wallets


• Unified Payment Interface (UPI),


• IMPS


• USSD


• RTGS, and NEFT


• and recently launched BHIM.

But there is big question about which one should you use and for what kind of transactions? Here’s how you can decide.

Parameters to consider

1. Time taken to complete a transfer/payment


2. The maximum amount you can transfer


3. The financial details/information (e.g. account number etc) that you need to complete the transfer;


4. How is the transaction validated/authenticated;


5. Whether you will earn interest on the money kept in reserve in the payment system?


6. Whether you need to specify who the money is being transferred to in advance i.e. register the beneficiary (recipient) of the money (beneficiary registration);


7. What infrastructure/technical support is a must for the transfer to happen


8. And lastly, what are the costs involved There is no single ‘best’ payment option for everyone and all transactions.

Transaction's Value

One way of choosing a payment option is to base your decision on the value of the transaction. You could divide the payment solutions into two categories and choose from

• RTGS/NEFT/debit and credit cards for transactions of over, say, Rs 10,000


• IMPS/UPI/USSD/e-wallets for payments below Rs 10,000.

However, the value of transaction is not the only deciding factor: safety and ease of use are some of the other important parameters.

Authentication

In terms of authentication, standard security procedure, which is two-factor authentication, is followed in case of all these alternatives. It refers to login ID and password set up by you coupled with something that only you can provide — a PIN or an OTP (which is a one time password delivered to your registered mobile).

You'll see up gradation of this to bio metrics in coming days.

Network Safety 

Consider a scenario that you're performing a payment and internet has gone; this is a weirdest part of digital life. Apart from this, how safe your transaction is would also depend upon where and which network (public/private Wi-Fi or mobile data) you are using to make the payment transfer.

Costs

The most important factor to go digital is the charges involved to perform the activity. Due to demonetisation, the government has been frequently slashing fees or commissions charged by various e-payment solution providers to encourage a cashless economy. As of date, these are the maximum fees/commission your bank/intermediary could charge to transact virtually.

Although the transactions through e-wallet are not charging anything but you didn't get hard cash directly into your bank account where as the other options are exactly opposite. My personal preference is IMPS which is a immediate mode of making any payment.

In terms of cost, if you wish for instant digital payments up to Rs 1 lakh, UPI and e-wallets seem like better option but if you wish to pay above Rs 5 lakh, NEFT is cheaper, but there is a trade off with the time taken to complete the transaction.