In the pre-pandemic era, the concept of contactless (aka touchless) payments had newly emerged in the financial services industry. The initial aim was to make the payment experience at the checkout counter quick, convenient, and smooth by simply swiping or tapping a debit or credit card.
With the sudden outbreak of COVID-19, the need for digital, contactless payments took off. This, coupled with the government’s emphasis on the adoption of digital payments, encouraged a majority of Indians to initiate online transactions, which they now not only find convenient but also prefer as part of their method. Sure, there is no denying that offline payments still exist and are used by several consumers; however, only a fraction of the population belongs to this category, primarily from rural areas.
Data is an indicator of this shifting trend, with 91 percent of Indians reportedly preferring online payment methods, including UPI, e-wallets, POS machines, and internet banking, as per the Experian Global Insights report published in 2022.
The option of being able to pay or receive digitally, without worrying about keeping cash in hand, has thus propelled consumers to engage in high-volume transactions. This is in stark contrast to earlier years when consumers would transact in cash and therefore could purchase limited items. But now, online payments have aided in isolating such concerns.
These trends push us to ponder on a number of the important questions that not only impact the consumers but also businesses – are online payment methods more secure than offline? And, will this realisation foster the growth of the digital payments industry?
Dissecting the Online vs Offline Payment Scenario
The truth is that security concerns exist to some degree – whether it is about online or offline payments. They exist with debit cards, credit cards, and even cash for that matter. However, a common misconception is that offline payments are safer and more transparent than online, which is changing in light of growing cases of fake currency and bounced checks. Additionally, the high-profile nature of offline payment security breaches has evoked greater fear and awareness around offline risks.
In general, traditional banks, financial institutions, and big box retailers have lacked the same commitment to safety and security as online payment facilitators.
Refurbishing the entire structure and equipping it with efficient data security measures is a time-consuming and expensive proposition, and this served as a common reason to neglect the integration of security practices within the ecosystem.
This stands contrary to digital payment platforms that are designed from the ground up, with convenience, security, and ease of use at the core of their foundation. What additionally makes online payments highly sought-after is its capability to enable cross-border trade without the complexity of currency difference, paired with global acceptance and 24×7 availability.
Moreover, given that digital payments are recorded electronically and can be easily tracked at any given point has helped in combating payment frauds and monitoring stuck or failed transactions.
Looking at this steady growth of digital payments in India, payment solution providers are also actively enhancing their business models using advanced algorithms, AI, and ML technologies.
The goal remains to facilitate secure, innovative, easily accessible, and user-friendly platforms for the benefit of both consumers and business owners. After all, offering a secure and friction-free payment experience is what will go a long way and help in retaining consumer loyalty & satisfaction.
What Does the Future Look Like?
The online payments industry in India has transformed drastically in the past few years and a very short span. More and more innovations are coming to the fore every single day and not to say but this trend will continue to exist. Looking ahead, all-cash is certainly not a sustainable solution.
Consumers have grown habitual to the ease and convenience of making online payments, along with the parks that come with it, and any shifts in this payment pattern will only be momentary.
The move to online payments has already happened and the occasional breaches in both online and offline modes will simply serve as catalysts for change and development in the context of providing services. These trends and proactive measures will pave the path for easier payment solutions!
-The author is the Chief Operating Officer, Tech Fini. Views expressed are personal.
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