Navigating the Future of Digital Payments: Key Trends, Opportunities and Challenges

Abstract

With the rise of technology and the internet, traditional cash-based payments are gradually giving way to faster, more convenient and secure digital alternatives. Digital payments, which encompass a range of payment methods such as mobile wallets, online banking, credit/debit cards and cryptocurrencies, offer a seamless and efficient way to make transactions. This shift towards digital payments has transformed the financial landscape, enabling greater financial inclusion, reducing transaction costs and increasing economic efficiency. As the world becomes increasingly digital, it\'s essential to explore their benefits, challenges and implications for the future of finance. In this conceptual study, the researcher undertakes an exhaustive review of existing knowledge, synthesizing insights from a broad spectrum of secondary data sources. The study aims to identify patterns, trends and relationships that inform a deeper understanding of the subject. Through this rigorous analysis of existing literature, the study seeks to distil a clear and authoritative conclusion, shedding new light on the topic and paving the way for future exploration.

Introduction

I. INTRODUCTION

Digital payment refers to the electronic transfer of money from one account to another through digital channels like mobile phone, online channels and payment gateways etc. enabling fast, secure and convenient transaction without the need of physical cash or cheque. With benefits including enhanced security, real-time processing and increased financial inclusion, digital payments have transformed the way people transact globally. Offering ease, speed and efficiency, digital payments continue to shape the future of financial transactions, driven by advancements in technologies like block chain, AI and biometric authentication. The rise of digital payments has been driven by the proliferation of smartphones, internet penetration and the growing demand for contact-less transaction. As a result various digital payment methods have emerged including mobile wallets, online banking, contact-less cards and cryptocurrencies.

II. REVIEW OF LITERATURE

Putambekar & Devendra (2023) conducted a analytical research on the topic a study on the opportunities and challenges of the customers towards digital payment systems. The study aims to explore the elements driving customer adoption, the opportunities and the challenges present in the digital payment. The researcher concluded that Digital payments are on the rise, driven by convenience, efficiency, and user satisfaction. They provide a seamless experience with contact-less transactions, precise payments, and transaction tracking, while also offering reminders and suggestions. This growth is further accelerated by government initiatives, widespread smartphone adoption, and affordable internet, propelling India towards a digital economy. The major challenges impacting digital payment is the security concern followed by internet security and excessive transaction costs.

Ranjith et al., (2021) conducted a research on the topic a literature study of customer perception towards digital payment mode in India. The study aims to understand the different modes and the customer perception towards digital payment .The researcher concluded that people hesitate using digital payment platforms for making payment because of lack of awareness and security concerns. The ultimatum lies in the hands of the people to equip themselves with the advanced technology and conduct awareness programs in the areas that lack technological advancement .necessary security measures must be developed to unable the population use digital payment platforms without any security concern. 

Sujith & Julie (2015) conducted a conceptual study on the topic opportunities and challenges that are present in E- payments systems in India. The study aims to explore various e-payment modes, analyze opportunities and challenges of e-payment systems in India, and forecast the future of digital payments. The researcher has concluded that Electronic payments, used in e-commerce are debit/credit cards, smart cards, and e-wallets and the  risks present are  data theft and fraudulent transactions. Leveraging current technology ensures security through encryption, authentication, and data protection.

III. OBJECTIVES

1. To identify the secure and convenient trend from various Digital Payments.
2. To identify top most challenge present in Digital Payment.
3. To suggest some ways to tackle the challenge present in Digital Payments.

IV. RESEARCH METHODOLOGY

To uncover the underlying insights, the researcher employed a robust methodology, harnessing the power of Secondary data analysis to distil the essence of the data. This approach helped the researcher understand the community's thoughts and feelings, making it easier to identify the main ideas and key findings of the study.

A. Period of Study

 The period of the study was three-week, from October 1st to October 30th, 2024, providing a snapshot of valuable insights

B. Data Collection

Secondary Data: secondary data was sourced from a diverse range of reputable publications, including magazines, journals, newspapers, research articles, and books, providing a rich foundation of existing knowledge.

C. Scope of the study

The scope of the study is focused on two major sector that is health care sector and educational sector.

V. FINDINGS OF THE STUDY

A. Opportunities of Digital Payments In Educational and Health Care Sector

1) Education Sector

• Streamlined Fee Collection: Digital payments simplify tuition, examination fees, and other payments, reducing administrative tasks and errors
• Increased Accessibility: Students from remote areas can pay fees without traveling, and online platforms support scholarships and financial aid distribution.
• Integrated Payment Solutions: Digital platforms combine services like transportation, cafeteria, and library fees into a single system.
• Global Reach: Digital payments enable global access to online courses, eliminating currency exchange issues.
• Improved Record Keeping: Digital payment systems provide real-time tracking and detailed records of transactions.

2) Healthcare Sector

• Faster and Secure Payments: Digital payments reduce billing and payment time and effort.

• Improved Access to Care: Telemedicine and digital health platforms rely on digital payments for convenient virtual consultations.
• Insurance Integration: Digital payments facilitate easier claim submissions and reimbursements.
• Patient Financing Solutions: Digital platforms offer financing options for expensive procedures.
• Enhanced Patient Experience: Online payments reduce waiting times and streamline the patient experience.

3) Trends of Digital Payment

• Person-to-person (P2P) payments – (63%) - P2P payments enable individuals to transfer funds directly to another person's account using mobile devices or online platforms. Example include: Mobile wallets (e.g., Apple Pay, Google Pay)
• Contact-less Payments - 55% - Contact-less payments allow users to make transactions without physically inserting or swiping their payment cards. Method include: Tap-to-pay credit/debit cards
• QR code payments - 34% - QR code payments involve scanning a Quick Response code to initiate transactions. Example include: In-store QR code displays
• Biometric payments -27%- Biometric payments use unique physical characteristics (e.g., fingerprints, facial recognition) to authenticate transactions. Examples include:

 Fingerprint scanners, Facial recognition technology

• Cryptocurrency- 14% - Cryptocurrency payments involve using digital currencies (e.g., Bitcoin, Ethereum) for transactions. Examples include: Online cryptocurrency exchanges

B. Challenges In Digital Payments Faced By The Education And Health Care Sectors As per the National Payments Corporation of India (NPCI)

1. Technical issues (Network and infrastructure)– 25%: Technical issues, such as network downtime, slow processing, and infrastructure limitations, hinder seamless digital transactions
2. Security concern (Fraud, Data Privacy): 20%: Security concerns, including fraud, data breaches, and identity theft, erode trust in digital payments.
3. Lack of Digital Literacy: 20%: Limited understanding of digital payment systems and technology discourages adoption.
4. Cost of Transaction fees : 15%: High transaction fees associated with digital payments deter users. Competitive pricing strategies, transparent fee structures, and low-cost alternatives can increase adoption.
5. Trust in digital Payment Platforms: 10%-Uncertainty about digital payment platforms' reliability and security undermines trust.

Conclusion

1) Virtual cards which have a unique 15-16 digit card number generated digitally at the point of sale which is one of the secure and convenient trend of digital payment. 2) The top most challenge present in Digital payment is Technical issue such as network and infrastructure issue. 3) Some of the ways to tackle the technical challenge are a) Regularly Update Software b) Use Strong Passwords c) Implement failover mechanisms: Automatically switch to backup systems in case of failures.

References

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Copyright

Copyright © 2024 Dr. D. Monisha. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.