If you closely observe your local markets and even your friends and families, you can find that online payments are rapidly replacing cash transactions. Shops and street vendors proudly display UPI QR codes. Most people have at least one digital payment app on their phone. Online payments became popular due to their simplicity, speed, and convenience. But they have several concerns and disadvantages as well.
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Key Highlights
- Online payment methods have several advantages and disadvantages that one should be aware of.
- The advantages of online payments include fast speed, a simple onboarding process, ease of use, automated payments, discount offers, and lower transaction costs.
- The disadvantages of online payments include fraud risks, difficulty in tracing, technical issues, reliance on the internet, loss of smart cards, identity theft, and more.
The Good Side of Online Payments: 10 Advantages of Online Payments You Should Know
1. Online Payments Are Faster
What has made online payment apps so popular in India? Speed is a key reason behind their popularity. When compared to traditional ways such as cash and cheques, online payments seem almost immediate.
2. Convenience
You can use online payment methods to transfer money at any time. Whether it's in the middle of the night or even on a bank holiday. You can make online payments using your laptop or phone from any place with an internet connection. That's why they are much more convenient than traditional payment methods.
3. Low Cost
There are many extra costs associated with traditional payment methods that you can avoid by making online payments. For example, you should incur postage fees for sending a cheque to another city. Online payment methods allow you to complete utility bill payments from the comfort of your home, saving on travelling costs. The processing fees or transaction costs the banks charge for online payment methods are quite low.
4. Multiple Payment Methods
There are plenty of digital payment methods to choose from. You can pay via net banking, online payment apps, digital wallets, or even through your debit and credit cards. You can choose a payment method according to your convenience.
5. International Payments
Digital payments have made international payments simple and hassle-free. Many online payment apps such as Shriram One allow you to make payments outside of India with ease. Because of these new-age payment methods, businesses can serve international customers and individuals can make payments to their friends and family abroad.
6. Automated Payments
This is one of the most unique advantages of online payments. With online payment systems, you can automate your rent, utility bill payments, credit card bills, and mobile recharges. Once you set up an auto debit, there's no need to remember all due dates or stand in lines at government offices to pay your bills.
7. Easy To Set Up
Whether it's a UPI app, an online payment app, or a digital wallet, signing up for these payment methods is quite easy. The set-up process can be completed from your electronic device, like your laptop or your smartphone. For instance, the onboarding process of the Shriram One app is completely paperless and is very simple to follow. There's no need to fill out tedious bank forms and you don't have to carry the photocopies of your ID proofs anywhere.
8. Easy To Track
Those who make all their expenses in cash find it very difficult to keep track of what they are spending on. But if you use digital methods, it becomes easier to know where your money is going. Most payment applications allow you to view your transaction statements where you can see all your previous transactions. With UPI apps, you can also mention what the payment is for, in case you forget it later. You can easily organise your finances with this unique feature.
9. Facilitate Sales Growth For Businesses
If you run a business, accepting customer payments through digital modes can improve your sales. Imagine that a customer does not have enough cash to pay for the groceries they got from your shop. If you don't accept digital payments, they will surely walk to another shop that does. That's why the use of QR codes is on the rise in India. There was a 79.5% growth in the acceptance of the UPI QR code in 2022 than in 2021 because of these advantages.
10. Rewards
This advantage of online payments mostly applies to UPI apps, payment gateways, and digital wallets. These apps offer rewards as a marketing strategy to attract new customers.
There are several disadvantages of online payments that you should be aware of.
10 Disadvantages and Concerns of Online Payments
1. Risk of Fraud
This is the first concern that comes to mind when we think of risks related to digital payments. And the news about cyber fraud does not make it easier. Most online payment methods use state-of-the-art payment security features, but scammers have come up with ways to surpass some of them. There are many types of digital fraud such as phishing scams, ransomware attacks, and information stealing that you should be aware of.
2. Technical Issues
Sometimes users face issues while making online payments due to technical issues like server outages and glitches. These technical issues can delay your payments or even fail them. That's why one can't completely rely on digital payment methods like UPI apps and payment gateways.
3. Transaction Limits
Digital payments are convenient, but banks often set up limitations on them. Some banks prohibit transactions above a certain limit in a single day. One has to keep these limits and restrictions in mind before initiating payments.
4. Dependency on Internet
You cannot use digital payment methods without having a good internet connection. For instance, if you are travelling to a remote area with no mobile network or internet connection, these payment methods are of no use to you.
5. Identity Theft
Fraudsters may steal your financial information and use digital payment methods to impersonate you. They could purchase items using your credit card or transfer funds from your bank account to theirs using UPI apps. These identity theft scams are quite difficult to detect, so maintaining payment security becomes difficult.
6. Loss Of Cards
Some digital payments are completely paperless, but you should keep your debit and credit cards safe. If you lose your cards, they could easily be misused. Losing your card information is another similar threat. To prevent these, banks have started implementing OTP verifications for online transactions.
7. Unfamiliarity With Technology
Not everyone is familiar with the latest technology. Most parts of India are still learning how to use their smartphones. Even senior citizens shy away from digital payment methods due to these concerns.
8. Password Threats
Most of us save our passwords on our smartphones or browsers to avoid remembering them. These applications have access to your passwords, and if their system gets hacked, your passwords could be compromised. Also, if you write down your passwords and lose them, someone could misuse that information to steal funds.
9. Difficulties With Refund
In case you find that someone has used your online payment information to make unauthorised transactions, it can be challenging to get your money back. To begin with, tracing the person to whom the money is transferred can be difficult due to the lack of personal information. Without that information, it is challenging to lodge complaints with banks and the police.
10. Transaction Costs
Banks charge transaction costs, especially for international payments and debit or credit cards. For other modes like UPI apps, the processing fees and service charges are low. But there are additional costs nonetheless.
Pro Tip: Use online payment apps developed by trusted companies to reduce security concerns. For instance, Shriram One is an app developed by Shriram Finance, a company that has provided financial services with integrity for years.
Summing Up
Once you know the pros and cons of online payments, you can use them to your benefit while exercising caution wherever needed. Use online payment methods for their simplicity and speed while doing your best to avoid the risks and concerns related to them.
If you are searching for the best online payment app, Shriram One is the right choice. It is a one-stop solution for all your financial needs, like utility bill payments, UPI transfers, making investments, and buying insurance. You can manage your finances using just one platform that is easy to use, secure, and reliable. Sign up on Shriram One today!
Frequently Asked Questions
1. What is the primary advantage of using online payments?
The primary advantage of using online payments is the speed and convenience. Digital transactions can be made almost instantly from anywhere at any time.
2. What are the security risks associated with online payments?
The security risks associated with online payments include cyber fraud, identity theft, loss of internet connection, transaction limits set by banks, and more.
3. How do online payments raise privacy concerns?
Hackers and fraudsters can steal your private financial information if you use online payment methods for your transactions. This could lead to identity theft or other digital scams.
4. What payment options are available for users in online transactions?
Multiple payment options like net banking, digital wallets, and UPI apps for users in online transactions.
5. Can technical issues disrupt online payment processes?
Yes. Technical issues like server failures and glitches can disrupt online payment processes.
