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What is Cashless Payment System?

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  • Last Updated : 19 Feb, 2020
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In this digital world, we all need to know about the cashless payment options. So it could pave the way to the hassle-free digital lifestyle. Here we are going to discuss some valuable information on mobile banking, digital banking, and a lot many digital payment options that you should know about them and how to be familiar with the cashless payment options in this era of digital transformation.

What is Mobile Banking?

Mobile banking is the facility enabled for bank customers to do financial transactions and operations via mobile devices like phone and tablet computers. Here we would have come across the mobile banking apps that could connect to our bank account by mapping our unique customer ID. We can seamlessly connect with our bank account at no extra cost. This is the advantage of digital transformation in banks.

What is Digital Banking?

Digital banking is the banking services made digital. That is with internet facility banks can connect with its customers to enable transactions instantly. This saves lots of time and resources. Internet banking facility, cash deposit machine, ATM cash withdrawal facilities are all examples of digital banking. Nowadays you need not go to the bank for opening a deposit or loan account submit your know your customer(KYC) documents online to open any statement. Even you can open trading accounts within minutes with the power of mobile and digital banking facilities.

Now we were talking about digital transformations of banks and other financial institutions that proffer payment and fund transfer options to render the utmost benefits to society. You would have heard of payment gateways, like PayPal, pay, Paytm, Google Tez, and a lot more plethora of payment channels that are evolving in this cloud connect internet. We will see what do they do and how do they operate?

These are evolving payment channels that were created for the benefit of society. These include, payment gateways which are the bridge between the bank and the place you purchase the goods. The payment gateways help in simplifying merchant transactions. The prominent payment gateways are Paypal, PayU money, RazorPay, Payoneer, Paytm and much more. Payment gateways are typically secured software that aids in transmitting transaction data between acquiring banks and responses from the issuing bank whether the transaction is approved or not. In a traditional payment system, it involves all the physical cash, ledger entries, and vouchers to validate a business transaction. But after the evolution of digital transformation, the payment gateways simplifies the business and helps in reaching business and economy to a more magnificent feat.

How Does Payment Gateways Work?

Payment gateway converts the XML format to a message format that is understandable for electronic fund transfer switches. This message format falls under ISO 8583 standard. Then the payment processor sends it to the acquiring bank for validation and authorization. Finally issuing bank confirms the transaction. The entire process would take only about 2-3 seconds.

UPI(Unified Payment Interface) Payment is a real-time instant fund transfer payment system that is developed by NPCI – National Payment Corporation of India. It is a centralized network mechanism regulated by the Reserve bank of India. UPI is a mobile-only payment system that transfers funds between banks. Every bank would have UPI virtual address enabling features to facilitate interbank transactions on a mobile platform.

How Does UPI Payments Work?

UPI payment is constructed as a layer over the IMPS instant mobile payment system. That doesn’t need the beneficiary addition and the pooling period to authenticate the payer. With the mobile number registered with the bank, it proved both the sender and receiver. The payment could be made instantly without any hassle around the clock 24/7. It is to make the economy cashless. Digital Wallet is your credit card or debit card stored in a mobile application that is enabled to make financial transactions across merchant terminals.

How Does Digital Wallet Work?

Near field, communication technology is the technology behind the digital wallet payment systems. That is when two smart devices are in close connection, the ability to enable them to communicate with each other is called near field communication. Digital wallets do study consumer behavior on the market. This would be a significant fodder for companies that thrive on consumer’s purchase data analytics to market their product. You could store your funds digitally here, even the coupons, and other consumer goodies.

Point of Sale(PoS): The point of sale is a complete package of software and hardware. It is a mighty boon to business owners and retail outlets. Pos operates on an exclusive software that simplifies the major financial recording, tallying functions in a merchant outlet. The software components are of two kinds on-premise pos and cloud pos. Each has got its hardware and compatibility requirements. Flexibility and the ability for integration are the key functionalities of pos software.

PoS does sales reporting, inventory management, employee management, and consumer management. It operates with a bar code scanner or credit/debit card scanner, receipt printer and a monitor to authenticate the purchase after that connects with the payment processor to initiate the merchant transaction. PoS software could be easily integrated with the existing accounting software to ensure flexibility in the retail outlets.

How Does a Coder Orient the Skills With Payment Channels?

The growing number of digital payment systems increases the demand for a skilled software developer to program a secure software system that ensures safety and simplicity in trade and merchant transactions. Being skilled in coding concepts opens new opportunities from varied industries. Round the year, the developers are on high demand in digital wallets and digital payments companies. It is the era of computer programmers to sweep the market with their skills on data structures and algorithms to solve and simplify the day to day real-life chores. Digital transformation in the payment system is changing the economy. This evolution of the cashless economy is a great boon to society.

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