CHALLENGES AND PRECAUTIONS IN USE OF ONLINE PAYMENTS BY - SUBASH S
CHALLENGES AND PRECAUTIONS IN USE OF ONLINE PAYMENTS
AUTHORED BY - SUBASH S
ABSTRACT:
The
main motivation behind starting a business is to make money. Additionally, the
idea of turning a profit is only feasible if your business accepts online
payments from customers. Due to recent technology advancements in the
e-commerce industry, online payments have become more significant. It makes
natural that they wouldn't give the numerous benefits that come with using
online payment systems. However, we encountered a number of difficulties when
making payments online, including theft, fraud, and scams. This article
discusses the difficulties people encounter while making payments online and
offers some advice on how to avoid these difficulties. The numerous benefits
and drawbacks of online payments were also thoroughly examined in this article.
KEYWORDS:
Technology,
Credit/debit cards, Digital payments, Online payments, Mobile banking
INTRODUCTION:
Online
payments are not a brand-new concept, but the COVID-19 outbreak has increased
their popularity worldwide, particularly in India. Credit/debit cards, UPI, and
mobile banking are some of these options. As more businesses incorporate online
payment gateways into their portals, these e-payment services are becoming more
and more important for both vendors and customers.
Making
money is the entire reason a firm is established. And only if your company
allows clients to make payments is the entire concept of profitability viable.
Online payments have evolved with recent technical improvements to become an
integral component of the e-commerce sector. And why wouldn't they, given the
numerous advantages offered by online payment features.
DEFINITION OF DIGITAL PAYMENT:
A
digital[1]
payment is any transaction in which value (such as money) is electronically
transferred from one account to another. Digital transfers are intangible, as
opposed to conventional monetary payments.
With
digital payment methods, cash, credit or debit cards, or checks are not
required. When you use digital payment apps, everything passes through a
processing mechanism on gadgets like smartphones and desktop computers.
The
world is becoming more and more computerised, as everyone who has been paying
attention over the past few decades has probably seen. Many businesses are
making sure they are adapting to these changes because it appears that digital
is the way to go. This was reinforced in 2020, at the height of the COVID-19
epidemic[2],
when many industries were forced to go online in order to continue operating
and producing. To keep up with their daily productivity, offices now use
digital technologies. Digital services were crucial to people's capacity to
stay connected. Online payments are collectively referred to as online payments.
When using any services or making purchases of items, whether online or
offline, these payments are made. Online purchases can be one-time transactions
(like an Amazon purchase) or recurring transactions (like a Netflix
subscription).
GUIDELINES
TO CONSIDER WHILE MAKING ONLINE PAYMENTS:
Even
while online payments appear to be quite secure and straightforward given the
growth in fraudulent activities, there are a few things you should be aware of.
Don't store card information: The
majority of us prefer to store our card information on our phones or other
devices to prevent having to input it again. This is not advised, though, as it
might be used incorrectly in cases of theft. Make careful to always remove your
card information after each use.
Keep your passwords to yourself: As
cliché as it may sound, it is important to heed this advice. So that you avoid
becoming a target of hackers or other internet criminals, keep your passwords
confidential and change them frequently. Use a strong password and use the OTP
option for the highest level of security.
Avoid the use of public Wi-Fi: You
should never do business using Wi-Fi or public computers, regardless of how
pressed for time you are, as there is a high danger of data theft and other
threats.
Utilize private windows: Be
cautious to conduct all of your transactions in private windows and avoid any
dubious websites or applications that are not included among the top
recommendations in the app store. You may discover more about these programmes
by looking at reviews and download statistics.
Furthermore,
the prevalence of digital transactions has grown as more people exchange goods
and services online.
DIFFERENT
TYPES OF DIGITAL PAYMENTS:
What
are the many types of digital payments that you can face in your daily life or
place of business?
Examples
of electronic payment techniques include:
·
Purchases made with a mobile wallet
(smartwatches and cell phones)
·
Money transfers through mobile
payment apps (such as PayPal, Venmo, Zelle, etc.) and QR codes.
·
Online purchases (such as for apps or
browsers)
·
Cryptocurrency payments
Online
payments are not entirely new, but the COVID-19 pandemic has only expedited
their growth.
ONLINE PAYMENTS:
Online
payments are the broad term for payments done through the internet. These
payments are made when using any services or making purchases of goods, whether
online or offline. Online payments can be one-time payments (like an Amazon
purchase) or ongoing payments (like a Netflix subscription). Bank transfers [3]are
one of the popular methods of online payment.
·
Online credit/debit cards,
·
PayPal,
·
Google Pay,
·
QR codes, and
·
BNPL
are all
examples of digital wallets.
HOW DO ONLINE
PAYMENTS WORK?
Here’s a very basic and also the most common model of how online
payments usually work:
·
A customer places an order on the
merchant's website
·
The payment gateway collects all the necessary
data and information for the transaction to take place
·
The data is then sent to the bank or
credit card company[4]
·
This is further forwarded to the
customer's card company
·
The bank then confirms the
transaction and notifies the merchant
·
Finally, the merchant sends a message
to the customer confirming they have received their order.[5]
These e-payment services are becoming more and more essential for both vendors
and customers as more companies integrate online payment gateways into their
websites.
TIPS TO FOLLOW WHILE MAKING ONLINE PAYMENTS:
Despite
the convenience and safety of online payments, there are a few things to watch
out for given the rise in fraud.[6]
·
Don't save card information: To avoid
having to enter our card information again, the majority of us prefer to save
it on our cell phones or other devices. However, this is not advised because it
might be misapplied in cases of theft. After each use, make sure to always
delete your card information.
·
As cliché as it may sound, never
share your passwords: It is crucial to heed this advice. Keep your passwords
private and change them frequently so that you don't become a target of hackers
or other online criminals. For best security, use a strong password and turn on
the OTP option.
·
No matter how hurried you are, you
should always avoid utilising public WIFI networks or laptops to conduct
business because there is a considerable risk of data theft and other cyberattacks.
·
Use private windows: Be careful to
conduct all of your transactions through private windows and stay away from any
questionable websites or apps that are not listed in the app store's top
recommendations. By checking reviews and the number of downloads, you may learn
more about these apps.
ADVANTAGES OF ONLINE
PAYMENTS:
1. Speed of transactions
Online
payments save a tonne of time for the buyer and the vendor. There is no need
for people to stand in line, write checks, or wait for paper bills. They can
get the money immediately; they don't need to wait for banks to process their
checks.
Since
they don't have to waste time printing and mailing bills, merchants save a
tonne of time. The likelihood of late payments is also lower with online
payments. People won't forget about or put off a transaction because it only
takes a little while to finish it.
2. Convenience
Any
time of day, from any location in the world, anyone can make payments for goods
and services. It is simpler to use a smartphone feature than to gather the
appropriate amount of cash for your buy. You don't need to worry about carrying
a lot of cash, getting robbed, or getting imperfect change. With online payment
methods, all you have to do is remember a certain pin to complete your
transaction! Just like that.
3. Reaching global audience
The
ability of businesses to operate internationally and have a clientele
unrestricted by geography is one of the main benefits of having online payment
gateways. Over 56% of internet shoppers, it has been found, prefer to shop
internationally. Because you will be serving a global audience, adding online
payment alternatives to your e-commerce site will definitely boost sales.
4. Low transaction costs
Businesses
must employ front-desk staff or cashiers to handle sales and payments under a
typical payment system. However, transactions involving internet payments
happen in an automated setting. Online payment gateways are easy to set up for
businesses and have lower transaction costs.
5. Quick and easy setup
You
may quickly and easily integrate online payment gateways for your business
instead of taking the time to set up a comprehensive payment procedure that
requires specific hardware and additional staff. However, you can compare the
many possibilities before selecting the services of a specific vendor in order
to select the best one.
6. Variety of payment choices
You
may give your consumers a wide range of payment options with the help of online
payment services. People have their own preferences, therefore providing them
with that choice when making a purchase from you definitely increases the
likelihood that they will actually complete the deal.
7. Availability of more distribution
channels
Having
online payment choices as a business can greatly improve your distribution
methods. If you're prepared to take payments online, you can join the affiliate
market and expand your sales by having your goods or services advertised on
other websites. It is a fantastic technique to boost sales.
8. Easy management
Your
money and other financial information are simpler to manage and store when you
use online payments. There are numerous tools on the internet that can assist
with transactions for both customers and sellers. You can let the tools manage
your funds instead of having to keep track of them yourself. Since you don't
need to carry cash or credit cards, things just grow simpler.
9. Better customer experience
If
customers feel it is convenient to purchase from you while also being able to
save money and time, then that automatically translates to a positive customer
experience. And as a business, you must put customer experience above
everything else. Implementing online payment options for your business is a
great way to achieve it, as many people nowadays prefer online payments over
cash or card transactions.
10. Recurring payment capabilities
Subscription
markets are now easily operational because to online payments. People used to
regularly make cash or credit card payments in the past. Nowadays, consumers
don't need to actually remember to pay or make the effort to travel far to the
actual place of business to make their payments because those processes are
automated. Due to this, it is now simpler for both the merchant and the client
to accept and receive payments.
DISADVANTAGES OF
ONLINE PAYMENTS:
1[7].
Technical problems
Like
any other technology-dependent[8]
software, online payments are susceptible to technical issues or [9]downtime.
Even though tech maintenance operations are scheduled in advance and typically
occur at night, it can occasionally annoy online buyers. Many organisations
encounter high bounce rates, particularly when it occurs unexpectedly.
2. Password threats
There
is a good risk that an online portal can access your personal data or bank
account information if you are a registered user and often utilise online
payments. Even if one-time passwords (OTPs) are used for the majority of
transactions, some circumstances call for password protection. You could be at
danger for a privacy violation, especially if you work with several
institutions.
3. Cost of fraud
Cybercriminals
are adopting online payments as a preferred method of payment, just as more and
more consumers are doing. Database exploits, phishing scams, and identity theft
are all on the rise. Businesses install numerous payment-security software
programmes, at great cost, in an effort to stop these and boost security.
4. Security Concerns
There
is numerous security dangers associated with using online payments, as was
covered in the previous point. Important financial data and information can be
readily hacked by thieves if suitable security measures aren't taken. Criminals
can also easily evade capture because there are no verification mechanisms like
facial recognition or fingerprints.
5. Technological illiteracy
The
fact that many people, especially the older population, lack basic computer
literacy is one of the biggest drawbacks of online payments. They avoid using
online payment methods because they lack sufficient knowledge of how to use
technology and devices. Many of them continue to use traditional payment methods
because they are afraid of the difficulties involved. This is a significant
disadvantage for emerging nations like India.
6. Limitations on amount and time
Some
banks place a cap on the number of transactions or the daily maximum amount
that can be transferred. The majority of online transactions also include a
deadline by which you must finish them (like accepting and receiving OTPs). For
some people, all these restrictions may prove to be quite inconvenient.
7. Service fees and other additional
costs
Some
firms may charge setup fees or even processing fees for consumers using those
facilities when deploying online payment gateways. It goes without saying that
having access to the internet and other related services is necessary in order
to set up online payment options. Both the sellers and the buyers may find this
to be irritating since it frequently results in incurred additional charges.
8. Disputed transactions
You
can complain to your bank or the company that handles your online payments if
you discover someone using your electronic funds. However, you cannot make a
complaint or request a refund if you cannot locate the person's personal
information or, for that matter, any information about them. In such cases, it
becomes challenging.
9. Loss of smart cards
The
majority of internet purchases are made via credit/debit cards, ATM cards, or
identity cards. Therefore, if you misplace any of these, your linked online
payment accounts will also be at danger. Of course, you can block your cards
after notifying the bank, but the interim period between losing your card and
restricting it may prove to be dangerous due to the possibility of numerous
fraudulent transactions.
10. False identity
There
is no way to tell if the person making an online payment is the one they say
they are, unlike with physical transactions. The majority of online payments
are made anonymously because there are no verification techniques like photos
or signatures. This has the potential to significantly increase forgeries and
identity theft.
CONCLUSION:
The
e-commerce sector is changing in a number of different ways thanks to digital
payments. It is pretty much expected of you to offer online payment
alternatives as a business owner and a client.
Online
payments have their own set of drawbacks that you need to be aware of, despite
the fact that they are generally thought to be favourable for many obvious
reasons.[10]
After all, in the modern digital environment, every useful function carries a
small amount of risk. Most of these drawbacks are manageable with the right care
and management.[11]
[6] https://www.financialexpress.com/money/behind-the-scene-the-pros-and-cons-of-digital-payment-apps/490257/
[7] https://www.financialexpress.com/money/behind-the-scene-the-pros-and-cons-of-digital-payment-apps/490257/
[11]
https://www.nttdatapay.com/blog/advantages-and-disadvantages-of-online-payments/