On 8th Nov, the Govt initiated the Demonetisation Drive and announced that from 9th Nov – the existing Rs. 500 and Rs. 1000 notes won’t be considered as a legal currency. The existing notes shall either be:-
- Deposited in the Bank
- Exchanged for new notes
Although the govt is trying its level best to provide new notes, however there is a massive shortage of new notes and it may take some time for the govt to print so many new notes so as to replace all the existing notes. It may take some time for the situation to return to normal and till then a lot of people are suffering as they are not able to transact due to the lack of availability of cash.
However, cash is not the only way of making a payment. In this article, we have tried to list 7 useful ways of making cashless payments. Some of these cashless methods have been there for a long time but some of them are also new ways which are picking up fast.
The smart people have already started resorting to these cashless payment options and it is expected that the rest will follow soon.
The 7 most popular ways of making cashless payments are:-
- Demand Draft
- Net Banking/ Online Transfer
- Debit/ Credit Card
- Gift Card
- UPI Apps
How to make a Cashless payment?
This method of payment has been there for decades and almost everyone knows about this method. You can issue a cheque for the specified amount from your bank account to be transferred to someone else’s bank account.
The payment is processed through the banking systems and therefore this method is also considered as the best system of payment as everything gets documented and there is a proof of payment. However, it may take a few days for the payment to get transferred and there is also a risk of default associated with cheque payment as the cheque may get dishonoured as well.
To avoid such payment failure issues, the other 6 cashless options have started gaining popularity as there is no payment default issue associated with the other 6 cashless options.
- Demand Draft
To avoid the risk of payment fault, some people prefer to receive payment through Demand Draft. A demand draft basically ensures that there is no risk of payment fault and is signed by the banker.
Both the above options i.e. Cheque as well as Demand Draft, require a person to visit the Bank/ATM to deposit the cheque/Demand Draft. Moreover, the bank may also take some time to process and complete the transaction.
- Net Banking/ Online Transfer
With the growth of internet, account transfers have been made very easy. You don’t always have to go to the bank to do an account transfer. You can do the same yourself if you have your internet banking id and password. This is much faster than cheque transfers and there also won’t be any risk of payment fault.
So rather than instructing the bank to transfer the payment, you can do the same yourself. If the payment is to be transferred to an account within the same bank –the amount will get transferred instantly. If the payment is to be transferred to a bank account in some other bank – it may take some time for the payment to get processed.
- Debit Cards/ Credit Cards
Use of Debit cards and Credit Cards in India is also not something which is new and has been there for a long time. Most of the people who have a bank account also have a debit card but they may or may not have used it till now.
However, as the new currency is taking time to reach to everyone, many people have started using Debit Cards for payment. The merchant to whom the payment is being made should have a card receiving machine and the payment would be made instantly once you swipe the card without any risk of payment fault.
- Gift Cards
As the name suggests, this card is used for gifting. So instead of gifting cash, I can gift somebody a card which has a pre-loaded amount in the card. This amount is loaded by the bank into the card and can be used at all places where the Debit/Credit cards are accepted. In other words, it is just like a Debit/ Credit Card except for the fact that it is mainly used for gifting. But you can also create such a card for your own personal needs.
- Mobile Wallets
The mobile growth in the past few years has led to a new form of payments i.e. payments through the mobile wallets. You can load money in your mobile wallets like Paytm, Mobikwik etc and then use it to make payments.
These mobile wallets are very convenient to use for small payments and a lot of people have now started accepting it. The payments can be transferred instantly to any person across the country and the person receiving the payment is also not required to have any card machine for accepting such payments.
These mobile wallets are currently giving a lot of discounts as well and millions of people already use these apps. Moreover, with the Demonetisation drive being initiated by the Indian Govt, the use of such digital wallets has increased more than 10 times as it is very easy to use and can be used to make any payment.
- Unified Payment Interface – UPI
After the success of Mobile Wallets, the Indian govt has also started focussing more on digital payments and mobile payments. They have launched the unique payment gateway through which a person can transfer money to any other person instantly through the mobile.
The person receiving the payment is not even required to share this bank details with the person making the payment. You can create a virtual address like abc@axisbank and can share this with the person making the payment. The person making the payment will transfer the payment to the above mentioned id and the person receiving the payment can then transfer this amount to his bank account.
Moreover, you are also not required to create a unique id for each different bank account and a single virtual address will solve the purpose. Say for eg: If you are using the Axis Pay app – you are not required to use the apps of the other banks and through the axis pay app itself you can make all payments and receive all payments in different bank accounts held in different banks.
Mobile Wallets and Unified Payment Interface are certainly the future of cashless payments especially for small transfers. When a retailer has to receive small payments from a large number of customers, it may not be viable for him to share his bank account number with everyone.
Some big retailers do have a card machine for receiving card payments but for small retailers who don’t have card machines, UPI and Mobile Wallets will certainly help a lot.