Digital transactions: UPI vs Debit/credit cards vs Digital wallets

After 8 November, 2016, digital transactions have seen surge in growth,around 400-1000% alone in initial one month . Everyone from farmers in rural interiors to senior citizens in urban cities are struggling to adapt to the technology. Government has launched various initiatives to educate people towards digital transformation as well as some companies have opened their offices in remote areas with sole purpose of facilitating digital wallets and transactions.

The government has launched a toll-free helpline – 14444 – to address consumer queries on digital payments, which will address questions regarding various platforms, including the Bharat Interface for Money (BHIM), e-Wallets, Aadhaar-enabled payment system and USSD.

Some of the people are still confused regarding which payment mode to choose out of all the options available. Below is brief description about each mode of transaction, benefits and ease of use.

  1. Debit cards/Credit Cards

    Debit cards and credit cards are easiest mode of transaction for many people. Banks issue debit cards for account holders and if customers have activated their pin within specified time period, then debit/credit card becomes electronic cash. PIN  is just 4 digit number that needs to be remembered and entered every time you do transaction. So, debit cards are safe to use as long as you do no share your PIN with anyone. Similarly, now credit cards also come with PIN for increased security. But from 1st January, MDR (merchant discount rate)charges were effective on debit card transactions again. Although MDr discounts were given to merchants by RBI, they were not necessary to pass on. These charges along with transaction charges from ATM  will discourage customers from using debit cards and move onto other payment methods.

  2. Digital Wallets

    Paytm has become ordinary word for Indian citizens since demonetization. People are exploring benefits of digital wallets to ease their spending power. In metro cities, digital wallets were actively used pre-demonetization also. Now, Paytm has introduced Paytm “Nearby”, a feature that guides customers to their nearest Paytm merchant. Paytm has even got approval from RBI for its”Payment Bank”, which considered to be next step of moving forward and holding deeper roots in the market. Although, Airtel bank is being considered big competitor for Paytm payment bank.


    Tata Trusts and Google India’s ‘Internet Saathi’ program has partnered with digital wallet, Mobikwik to transform the lives of over 200 million with digital literacy in India. The initiative focuses on training communities to go online, whilst providing them access to internet powered devices and educating them about cashless payments. So wallet companies are moving forward and finding new ways to increase customer base, improve customer experience.

  3. UPI(Unified Payment System)

    UPI was launched in April 2016, with intention to provide standard digital payment system throughout India. All major banks in India(total 27, till now) have adapted to UPI and have their mobile app which are UPI based. In UPI, you could simply share your identifier, which resembles an email address. No hassles around IFSC, Bank account number or any other numbers. Since the sender has selected his/her user ID, it’s authenticated to the account. Also, major e-commerce portals like Bigbasket, Paytm are adding UPI as an option in their Payment gateways.

    UPI is still in initial stage and many security features still need to be added, but still it has started giving warning waves to digtial wallet companies. Since, in UPI money resides in bank till the transaction is actually made, users feel more secure. But two layer authentication of wallet companies provide enhanced security which is missing in UPI.

  4. USSD: Unstructured Supplementary Service Data

    BHIM app, recently announced by PM Modi, will enable people to send and receive money through their mobile phones by linking their bank accounts and UPI PIN number. The app will also work on feature phones through an upgraded USSD platform. In rural areas and tier III cities, majority of people still carry feature phones, so this announcement caught my attention.

    The *99# number is a USSD-based mobile banking service which brings together NPCI (National Payment Corporation of India) along with banks and telcos. For more details, on the NPCI website a list of participating banks, participating telcos and multi-lingual codes for the *99# service is provided.

    Using the *99# service, customers can check their account balance, mini statement, send money using MMID & IFSC and generate MPIN. Also, when Internet connection is not available, UPI transactions can be made through above hash tag service.

    This system purely works on the existing SMS system. Users don’t need any smartphone and this can work on even the feature phones, works 24×7, even on bank holidays. It uses normal voice connectivity to transmit data in the form of SMS, and there are no additional charges on roaming to use this service. To use this service, users need to link their mobile number to their bank account and dial *99# to start the service.

    You may also be interested in: Help Destroying Shadow economy(Black money)

Nitika Garg
Content Marketing Agency which is on a mission to empower people on career growth and opportunities available. We provide articles in Hindi and English for freelancers and working professionals, to grow in their role. We also write on trending career paths which you can choose.