Among numerous precautionary measures, the COVID-19 outbreak is also encouraging the use of digital payments.
By Sunil Khosla
The far-reaching spread of novel coronavirus has become one of the biggest threats to the economy and financial markets world over. Countries across the globe are taking numerous measures to contain the cascading effects of the virus outbreak.
Among numerous precautionary measures, the COVID-19 outbreak is also encouraging the use of digital payments. Even the RBI has urged customers to use digital banking facilities, ensuring contactless transactions.
While some sectors such as airlines, travel, retail, theatres, restaurants and entertainment parks that are directly hit by the COVID19 outbreak have pulled down the usage of the digital payments, some new sectors have also emerged. Small grocery stores, OTT, online gaming, e-learning, ATM withdrawals and broadband usage are giving a boost to the use of digital payments.
Let’s explore digital payment modes that one can opt in the current circumstances:
1. QR Code
Quick Response Code-based payments are gaining popularity in modern payment apps and devices. One can simply scan a QR code to pay for fuel, grocery, utility bills, fuel, food, travel and several other services. QR codes can be scanned both from paper and screen, facilitating instant payments and fool-proof security. When a customer requests to pay via QR, the merchant needs to select the “QR Code” payment option on the terminal and input the bill amount. This will generate a dynamic QR code on the PoS screen which can now be scanned by any mobile-based QR app being used by the customer. If a merchant cannot invest in a PoS Terminal, he/she can use the mobile-based QR app to generate static/dynamic QRs. QR reduces transaction errors and the need to input any transaction-related data.
Unified Payments Interface (UPI), developed by National Payments Corporation of India (NPCI), is an instant payment system. When a customer requests UPI payment mode, the merchant needs to select the “UPI payment” option on his PoS terminal and input the bill amount. This will generate a dynamic QR code on the PoS screen, which can now be scanned by any mobile-based UPI app being used by the customer. The number of transactions via UPI continues to rise, hitting 1.3 billion transactions in December 2019, according to NPCI data.
3. Payment Gateway
Payment gateway, a merchant service provided by an e-commerce platform, ensures that sensitive information, such as credit card numbers, entered into a virtual terminal or on an E-commerce website, is passed securely through various channels.
Amid Covid-19 outbreak when people are being encouraged to maintain social distance, there has been an increase in orders placed on e-commerce websites and apps for grocery, entertainment and food. A person availing any such services on e-commerce platforms can opt to pay through a payment gateway.
4. Contactless Payment
The Near Field Communication (NFC) feature on the PoS terminal allows one to easily make contactless payment to retailer for purchase at their store. The customer can choose to pay via their contactless credit/debit cards or through a Tap & Pay feature on a mobile application by tapping their smartphones on the PoS terminal.
5. SMS Based Payment
There are different types of mobile payments with functionality revolving around various POS factors. SMS payments are the ones where a customer pays for products or services via an SMS link sent by the merchant. The usage of SMS based payments is high in the service-oriented industry like restaurants and salons who prefer advance payments for booking/reservation. With the penetration of advanced smartphones and introduction of newer modes of payment, SMS based payments have become less popular whereas scope remains high in the service segment.
6. Prepaid cards
Closed-loop prepaid cards are the ones that can only be redeemed at the merchant who issued them. On the other hand, “semi-closed loop cards” or “restricted open-loop cards” are similar to shopping centre cards that can be redeemed at various merchants but only inside the shopping centre. These cards can be swiped/inserted on the PoS terminal for top-up/withdrawal purposes.
Summing It All Up
In order to make our contribution in this fight against Covid-19, we must take all safety and precautionary measures. When contactless transactions are being encouraged, let’s opt for safe and easy digital payment modes.
(The author is President, Digital Business India Transact Limited)