The Siddharth

University,
Kapilvastu ,
Siddharth
Nagar

RESEARCH REPORT
ON
“RESEARCH STRATEGY OF ONLINE PAYMENT SYSTEM”

SUBMITTED TO: Dr.Pawan Singh SUBMITTED BY: Sachin Kumar Maurya

& BBA 5TH SEMESTER

Dr.Rahul Vasen ENROLLMENT NO: 24801173310041

BBA (HEAD OF DEPARTMENT)

M.L.K.PG College Balrampur

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 DECLARATION

I,the undersigned Mr.Sachin Kumar Maurya declare that the

work embodied in this research project report,titled”
“Research Strategy of Online Payment System”, forms
My own contribution to the research work carried out under
the guidance of I further declare that this
is my original research work and has not been previously
submitted to any other University for any other
Degree/Diploma course.

Signature
(Sachin Kumar Maurya)

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ACKNOWLEDGEMENT
Presentation,Inspiration and motivation have always played a key
role in the success of any venture.I take the opportunity to express
our gratitude to all concerned people who have directly
contributed to the completion of this project.I extend my sincere
gratitude towards(MLK),Maharani Lal Kunwari (Pg) College” for
providing The opportunity an resources to work on this project.
“RESEARCH STRATEGY OF ONLINE PAYMENT SYSTEM”

I am extermly grateful to my HOD Sir Dr. Rahul Visen, we express our

heart filled gratitude to honorable sir Dr.Pawan Singh (Poject Guide)
whose encourage me to go beyond the scope of the project.
We also express our heart filled gratitude to our BBA studies staff for their
help and support that made a great experiences.

Name : Sachin Kumar Maurya

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M.L.K.(P.G) College ,Balrampur

Certificate
This is to certify that the research work entitled “Research
Strategy of Online Payment System” has been done by Mr.
Sachin Kumar Maurya under my guidance.
To the best of my Knowledge and bellef,this is her original
work and had not been previously submitted in any other
institution.

Date: Research Project Supervisor

( )

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 TABLE OF CONTENT
Chapter Name Peg No.

 EXECUTIVE SUMMARY 6
 RESEARCH PROBLEM 7
 SCOPE OF THE STUDY 8
 IMPORTANCE OF THE STUDY 9
 OBJECTIVES OF THE STUDY 10
 LIMITATIONS OF THE STUDY 11
 INTRODUCTION 12-43
 LITERATURE REVIEW 44
 SWOT ANALYSIS 45-47
 RESEARCH METHDOLOGY 48
 DATA ANALYSIS AND INTERPRETATION 49-62
 FINDINGS 63
 SUGGESTIONS 64
 CONCLUSION 65
 BIBLIOGRAPHY 66
 APPENDICES 67-69


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 EXECUTIVE SUMMARY

Digital payment system is an digital medium that allows

customers to make digital commerce transactions for their
purchase. Consumers have moderate level of payment
system as an ease of payment mechanism among
customers in E- Commerce scenario with special
reference to Balrampur District. The area of the study is
Balrampur district with a sample size of 50 respondents by
adopting convenience sampling method. The study
concluded that , as cash circulation has still major role in
transaction, which requires more awareness programs to
digital payment among customers as an easy source of
payment mechanism. awareness about digital payment
and there is still some problems and challenges faced by
the customers in the E-Commerce scenario. The aim of
this study is to have an eye on the problems and
challenges on digital Payments.

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 RESEARCH PROBLEM

Digital Payment is a financial exchange that takes place online

between buyers and sellers. The content of this exchange is usually
some form of digital financial instrument (such as encrypted credit
card numbers, digital cheque or digital cash) that is backed by a
bank or an intermediary, or by a legal tender. E-payment system in
India, has shown tremendous growth, but still there has lot to be
done to increase its usage. Still 90% of the transactions are cash
based. So, there is a need to widen the scope of digital payment.
Innovation, incentive, customer convenience and legal framework
are the four factors which contribute to strengthen the E-payment
system. The aim of this study is to explore the problems, challenges
and perception of digital payment system.
The study also focuses on the different modes of digital payment
system is most preferred by the customers as an easy payment
mechanism. Hence the problem is stated as “A study on problems
and challenges on digital Payment System as an ease of payment
mechanism among customers in e-commerce scenario with special
reference to Balrampur District.

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 Scope of the study
 The study is focused on use of online payment methods
among Balrampur City. It is highly relevant topic in
present scenario.
 People with e-payment apps set up on their mobile
phones will present the phones to near field
communication enabled readers on campus to complete
transactions.
 This study mainly emphasized on local people, college
students, their use, acceptance and satisfaction.
 The Scope of this study is wide because nowadays most of
the people use online payments system and still many
people find it difficult to use.

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 Importance of the study

The traditional methods of payment have now been replaced

by e-payment mechanism because of its wide use. It is used in
many areas like shopping, movie ticket booking, fee payment,
mobile recharging, bill payment etc. All these uses attract
students as their day to day activities gets more improved and
a lot easier. A lot of technological advancements have been
taking place in the field of payment. So it is very useful to
know about the new trends and advancements in payment
mechanism. It is also important that the young generation are
aware about these new trends. It is also necessary to study
about different methods of E-payment so that we can have an
idea about E-payment system.

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 Objectives of the study

• To analyze the attitude of youngsters towards e-payment system.

• To identify whether there is an ease of payment among the users.
• To analyze the various categories and potential uses of e-payment
mechanism.
• To understand the useage, acceptance and satisfaction level of e-payment
among students.

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 Limitations of the Study

• Samples taken may be biased.

• The sample size and spectrum of respondents is limited.
• Sample size Is Chosen from people of Balrampur city.
• The study is limited to studies of India only.

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INTRODUCTION TO ONLINE PAYMENT SYSTEM

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 Introduction
It has been said that every disruption creates opportunities and one such disruption
was the announcement of demonetization by Prime Minister Mr. Narender Modi on 08
November 2016. Demonetization created huge growth opportunity for digital payment
in India and the digital wallet companies garbed the opportunities with both the hands
to expand their market share. Demonetization has presented a unique platform for
adoption of digital payment, as an alternative to cash for Indian consumers. Cash may
not be a king anymore, the adoption of digital payments is picking up at an extreme
pace, everyone from vegetable vendor to chai-wala is adopting the digital payment
system to move away from the cash crunch. New technologies, players and consumer
expectations are changing the payments marketplace more than ever. The opportunity
of the new digital payment ecosystem comes with risks. From cyber security and
privacy to the impact of legacy technology and new competitors, it is far from clear
sailing for organizations wanting to be a player in the future payments marketplace. In
wake of the government initiatives towards transformation towards digital economy,
and many private companies, payment bank licenses issued by RBI, witness the
transformation. ―Faceless, Paperless, Cashless‖ is one of professed role of Digital
India. The emphasis is on the different methods of digital payments by considering the
challenges and providing solutions according to the existing scenario. Digital payment
includes providing financial services through fixed and wireless computer networks to
economic institutes, people, and families. Challenges of payment systems in different
countries have led to necessity of existence of effective systems for coherent payment
management considering suitable security structures and providing standards, rules and
regulations and performing the required supervision for good implementation in the
used payment model.
Past few years’ smartphones are having a tremendous growth due to accessibility and
availability of the internet. The mobile wallet providers like Paytm, PayPal,
Mobikwik, etc. with the payback schemes also attracting many consumers to use
epayment modes aiding the organisations with significant growth. The digital wallets
are further enabling economies to a cashless society. Electronic wallets and mobile
wallets are moreover digital version of the hard cash in physical wallet with more
features and functions. E-payments wallets reduce cost of cash holding and handling
for the retailers. Retailers on online platform have introduced lucrative discounts and
cashback offers to get payment orders for all the cashless payments. The online
platform retailers have encouraged more customers to choose a payment mode other
than Cash on Delivery, it also helps a business to retain their customer. Consumers
will return to the same website where his or her details are stored for making
payments, this way the transaction process reduces making the online shopping
smoother.
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14
 PAYMENTS SYSTEM
E-payment

Electronic payment also known as e-payment is a system that permits online payment
between parties using an electronic substitute of a financial tender.

E-payment systems have become increasingly popular due to the widespread use of the
internet based shopping and banking. There are numerous different payment systems
available for online transactions. These include the traditional credit, debit, and other cards
also new technologies such as digital wallets,

e-cash and mobile payments.

Digital Payment

Digital payment has become one of the famous and modern technology which is widely used in this
current period. This is the best alternative to avoid any obstacle regarding payments and all the other
activities like the shopping, recharge, and other wallet payments. Internet is a very important source of
life in this modern era in order to survive modernization along with digital payment is necessary. Digital
payments are now done through digital wallets also known as “e-wallet” that allows one party to make to
make electronic transactions with another party bartering digital currency units for goods and services.

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There are mainly three types of digital wallets and they are closed wallet, semi-closed
wallet, and open wallet.
New Era in Digital Wallets

Amazon pay, Paytm, PhonePe and Google pay are digital wallet platforms and online
payment system developed by Amazon, Vijay Shekhar Sharma and Sameer Nigam and by
Google to power in-app and tap-to- pay purchases on mobile devices, enabling users to
make payments with Android phones, tablets or watches. To use these you will need NFC-
enabled Android device running Lollipop 5.0 or higher for in-store purchases.

Types of Electronic Payment Systems

E-commerce sites use electronic payment, where electronic payment refers to paperless
monetary transactions. Electronic payment has revolutionized the business processing by
reducing the paperwork, transaction costs, and labor cost. Being user friendly and less
time consuming than manual processing, it helps business organization to expand its
market reach/expansion.
Listed below are some of the modes of electronic payments –
 Credit Card
 Debit Card
 Smart Card
 E-Money
 Electronic Fund Transfer (EFT)

Credit Card Payment

Using credit card is one of most common mode of electronic payment. Credit card is
small plastic card with a unique number attached with an account. It has also a magnetic
strip embedded in it which is used to read credit card via card readers. When a customer
purchases a product via credit card, credit card issuer bank pays on behalf of the customer
and customer has a certain time period after which he/she can pay the credit card bill. It is
usually credit card monthly payment cycle. Following are the actors in the credit card
system.

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  The card holder – Customer
 The merchant − seller of product who can accept credit card payments

 The card issuer bank − card holder's bank

 The acquirer bank − the merchant's bank
 The card brand − for example , visa or Mastercard.

Credit Card Payment Process Step Description

Step 1 Bank issues and activates a credit card to the customer on his/her request.
Step 2 The customer presents the credit card information to the merchant site or to the merchant from
whomhe/she wants to purchase a product/service.
Step 3 Merchant validates the customer's identity by asking for approval from the card brand company.
Step 4 Card brand company authenticates the credit card and pays the transaction by credit. Merchant
keepsthe sales slip.
Step 5 Merchant submits the sales slip to acquirer banks and gets the service charges paid to him/her.
Step 6 Acquirer bank requests the card brand company to clear the credit amount and gets the
payment.
Step 7 Now the card brand company asks to clear the amount from the issuer bank and the amount
gets transferred to the card brand company.

DEBIT CARD
Debit Card Debit card, like credit card, is a small plastic card with a unique number mapped with the
bank account number. It is required to have a bank account before getting a debit card from the bank.
The major difference between a debit card and a credit card is that in case of payment through debit
card, the amount gets deducted from the card's bank account immediately and there should be sufficient
balance in the bank account for the transaction to get completed; whereas in case of a credit card
transaction, there is no such compulsion. Debit cards free the customer to carry cash and cheques. Even
merchants accept a debit card readily. Having a restriction on the amount that can be withdrawn in a day
using a debit card helps the customerto keep a check on his/her spending.

Smart Card
Smart card is again similar to a credit card or a debit card in appearance, but it has a small
microprocessor chip embedded in it. It has the capacity to store a customer’s work-related and/or
personal information. Smart cards are also used to store money and the amount gets deducted after every
transaction. Smart cards can only be accessed using a PIN that every customer is assigned with. Smart
cards are secure, as they store information in encrypted format and are less expensive/provides faster
processing. Mondex and Visa Cash cards are examples of smart cards.

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E-Money
E-Money transactions refer to situation where payment is done over the network and the
amount gets transferred from one financial body to another financial body without any
involvement of a middleman. E- money transactions are faster, convenient, and saves a lot
of time. Online payments done via credit cards, debit cards, or smart cards are examples of
e-money transactions. Another popular example is e-cash. In case of e- cash, both
customer and merchant have to sign up with the bank or company issuing e-cash.
Electronic Fund Transfer
It is a very popular electronic payment method to transfer money from one bank account
to another bank account. Accounts can be in the same bank or different banks. Fund
transfer can be done using ATM (Automated Teller Machine) or using a computer.
Nowadays, internet-based EFT is getting popular. In this case, a customer uses the
website provided by the bank, logs in to the bank's website and registers another bank
account. He/she then places a request to transfer certain amount to that account.
Customer's bank transfers the amount to other account if it is in the same bank, otherwise
the transfer request is forwarded to an ACH (Automated Clearing House) to transfer the
amount to other account and the amount is deducted from the customer's account. Once the
amount is transferred to other account, the customer is notified of the fund transfer by the
bank.
Smart Cards and Electronic Payment Systems
A smart card, chip card, or integrated circuit card (ICC) is any pocket-sized card with
embedded integrated circuits. Smart cards are made of plastic, generally polyvinyl
chloride, but sometimes polyethylene terephthalate based polyesters, acrylonitrile
butadiene styrene or polycarbonate. Smart cards can provide identification,
authentication, data storage and application processing. Smart cards may
provide strong security authentication for single sign-on (SSO) within large
organizations.

Types of smart cards:

Contact smart cards
Contact smart cards have a contact area of approximately 1 square centimeter
(0.16 sq in), comprising several gold-plated contact pads. These pads provide
electrical connectivity when inserted into a reader, which is used as a
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communications medium between the smart card and a host (e.g., a computer, a

point of sale terminal) or a mobile telephone. Cards do not contain batteries;

power is supplied by the card reader

Contactless smart cards

A second card type is the contactless smart card, in which the card
communicates with and is powered by the reader through RF induction
technology. These cards require only proximity to an antenna to communicate.

Like smart cards with contacts, contactless cards do not have an internal
power source. Instead, they use an inductor 'to capture some of the incident
radio-frequency interrogation signal, rectify it, and use it to power the card's
electronics Example of widely used contactless smart cards are London's
Oyster card, Hong Kong's Octopus card, Tokyo's Suica and Pasmo cards used
for public transportation

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 ONLINE PAYMENT GATEWAY MODEL
In today’s world, online shopping has become popular; the utilisation of online payment
provides a large number of advantages to vendors as well as clients. For processing, the
transactions that take place over the web must go through a payment gateway. In practice,
the payment gateways act as a link amongst financial organisations responsible for
conducting the money exchange and the vendor’s website . In business over the Internet,
different factions are included in the online payment process for selling and purchasing
products. An electronic Payment Gateway is a fundamental part for online transactions
and supposed to ensure the client that exchange is reliable and safe in every aspect of
security . An E-Commerce Payment Gateway is a basic part of infrastructure to guarantee
that such exchanges happen with no problems and the overall security over electronic
systems is maintained. A Payment Gateway acts as an access point to the national
banking system. Every single online exchange must go through a Payment Gateway to be
handled. A Payment Gateway routes and confirms details of payment in amazingly secure
conditions between related banks and different factions. The Payment Gateway works
basically as an "encoded" channel, which safely routes details of transactions from the
purchaser's Personal Computer (PC) to banks for authentication and countersignature.
Upon approval, the Payment Gateway sends back the data to the merchant consequently
finishing the "order", and giving confirmation.

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 ONLINE PAYMENT SYSTEM DEVELOPMENTS
Globalisation in today's world is the result of innovative technological endeavours. The
advancement in technology has changed the skyline of payment systems, moving towards
e-World. Decisively, current innovation has changed customary systems of payment into a
more proficient and viable system, which is free from the cash-and-carry disorder. The
effectiveness of executing financial transactions and also a more secure and faster access to
funds, among different other components, has put e-payment system on a more celebrated
pace than the paper money based framework. Interestingly, in Nigeria, online payment
framework is picking up eminence to the degree that clients have now wanted to do
financial transactions without going to the banks. Thus, time of money based payment
framework is slowly blurring out as the cashless economy dominates present day
financial systems. Lately, online payment system has turned into a standard through
which fiscal element moves advantageously, particularly in a developing country like
Nigeria where it is habitual to carry cash. In such a country, the online payment system
has shaped into an important starting point of her present- day economy; a well-working
system of online payment has been perceived to have much pertinence to budgetary
strength, overall financial activity, and monetary policy [8]. In the meantime, the
initiative for an economy that is not based on cash will be preferred in the new era only
when it is supported with age advantage, good education, ownership of important
innovative foundations, among different other components, appropriately set up by
every concerned individual of the economic system and proficiently managed before
forcing the citizens to comply. The payments industry all over the world is growing at a
fast pace with the filtering of investments by big banks and the development of emerging
technologies by progressing startups. It was reported by Boston Consulting Group in
2016 that the transaction banking may reach from $1.1 trillion in the year 2014 up to $2
trillion in the year 2024, as depicted in Figure 3. While the focus has been on technology
and innovation, the advantages of new payment mechanisms are now being realised by
businesses for improving the bottom line and fuelling corporate growth.

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 ONLINE PAYMENT SYSTEM AS A BOON
For the first time in history, a review by the Federal Reserve Financial Services Policy Committee shows
thatelectronic payment exchanges in the United States have surpassed cheque payments. In 2003, the total
numberof electronic exchanges were equivalent to 44.5 billion dollars, while the quantity of cheques paid
were equalto 36.7 billion dollars. Evidently, a pattern among buyers can be recognised; purchasers are
seen to be more willing to work with online electronic transactions and employing an automated
medium to do their businesses. As indicated in a review by Customers could buy merchandise from the
web and send credit card numbers in an unencrypted form over the system, which made the transactions
quite vulnerable to threats and frauds. With development in online payment systems, a wide assortment
of new secure systems of payments have come up as customers turned out to be more mindful of their
protection and security. As argued by Cobb, Online Payments have remarkable number of financial
benefits in addition to their safety and ease of operation. These advantages when expanded can go far in
contributing hugely to financial improvement of a country . Computerised electronic payments help
develop deposits in banks and in this manner, increase reserves accessible for business credits – which is
considered as a driver of financial achievement. As per advantageous and secure electronic payments
convey with them a noteworthy scope of full scale financial advantages. “The impact of introducing
online payments is akin to using the gears on a bicycle. Add an efficient electronic payments system to
an economy, and you kick it into a higher gear. Add better-controlled
consumer and business credit, and you notch up economic velocity even further”. Online payment system
can be helpful in uprooting shadow economies, bringing masked exchanges into the banking system
and help in bringing straightforwardness, cooperation, and confidence in the economic system. In
addition to this, as specified by Al Shaikh in there is a relationship between the rise in demand deposits
and increase in point of sales volumes. “Automated electronic payments act as a gateway into the
banking sector and as a powerful engine for growth. Such payments draw cash out of circulation and into
the bank accounts, providing low cost funds that can be used to support bank lending for investment – a
driver of overall economic activity. The process creates greater transparency and accountability, leading
to greater efficiency and better economic performance”. In a comparative account in ,online payment is
extremely helpful for the buyer. Most of the time, the user is required to enter his account related
information - for example, credit card number and delivering address - once. The data is then kept on
retailer's web server’s database. When the client returns to the webpage, he simply signs in with his
username and password. “Completing a transaction is as simple as

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 clicking your mouse: All you have to do is confirm your purchase and you're done”. Hord in additionally
underlines that online payments bring down expenses of organisations. Less cash is spent on paper and
postage with increasing number of online payments. Presenting the option of online payments can
likewise help organisations enhance client preservation. “A customer is more likely to return to the
same e-commerce site where his or her information has already been entered and stored”. Electronic
payments can thus lower transaction costs stimulate higher consumption and GDP, increase government
efficiency, boost financial intermediation and improve financial transparency.

2) Regulatory and Legal Issues National, provincial or global arrangement of laws, standards and different
other directions are imperative prerequisites for the effective execution of online payment plans. A
significant portion of components incorporate guidelines on tax evasion, supervision of e-money
organisations and commercial banks by supervisory specialists; central banks should keep an oversight on
payment systems, buyer and information protection, participation and rivalry issues. As indicated by
Taddesse and Kidan the worldwide and virtual nature of online payment additionally brings up legal
issues, for example, which laws are relevant in debated cases and which jurisdiction will be competent,
legitimacy of digital signatures and electronic contracts. A legitimate and administrative structure that
builds confidence and trust helping technical endeavours is a vital issue to be tended to in executing
online payments.

3) Socio-cultural Challenges Social and cultural dissimilarities in outlooks and the utilisation of various
types of cash (e.g. utilisation of credit cards in North America and utilisation of debit cards in Europe )
muddle with the job of building an online payment system that is relevant at a global level . The
discrepancy in the level of the security required and productivity among individuals of various societies
and the degree of advancement worsens the issue. Buyer’s trust and confidence in the customary methods
of payment make clients more averse to embrace new innovations. New innovations won't rule the market
until clients are sure that their privacy is ensured and satisfactory confirmation of security is
safeguarded. New advances likewise need to
stand the test of time so as to secure people’s confidence, regardless of the fact that it is simpler to use
andless expensive than the more established techniques.

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 ONLINE PAYMENT SYSTEM AS A CHALLENGE

In spite of the numerous advantages of the online payment systems, they have their own difficulties and
challenges even in today’s technologically advanced world. The challenges which have been identified
by previous researchers are Infrastructure, Regulatory, Legal issues and Socio-Cultural issues.

1) Infrastructure

Infrastructure is fundamental for the effective execution of online payments. Appropriate infrastructure
for online payments is an issue.For online payments to be fruitful, it is necessarily required to have a
financially savvy and reliable infrastructure that can be availed by dominant part of the populace. In
developing nations, large portions of the country don’t have banks and have no access to basic
infrastructure that drives online payments. Electricity and Telecommunication are not accessible all
through the nation, which contrarily influences the advancement of online payment.
2) Overcoming Problems in Online Payment Systems

The payment systems supporting online transactions in a wireless environment should have a level of
security equivalent to that of fixed networks. Furthermore, the upcoming online payment applications
have to show compatibility with the current traditional payment infrastructure such that there is no
problem in operating the existing infrastructure. Nevertheless, the process of making transactions in a
wireless environment has several limitations which require the wireless-payment system designers to
look for innovative solutions for addressing those constraints. Reducing the computational requirements
of the protocols employed is one possible solution; another solution is the replacement of the
computation-intense cryptographic operations bymore efficient and smarter cryptographic protocols that
require less memory resources and computing. Consequently, there is a need of achieving a trade-off
between security and performance of transactions for making a secure online payment. Several measures
can be taken to overcome various issues in online paymentsystems.

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 BENEFITS OF ONLINE PAYMENTS TO PEOPLE
• Benefits for customers –
1. Convenience: Online transactions offer customers the convenience of making purchases anytime and
from anywhere with an internet connection. They can shop from the comfort of their homes or on the
go, saving time and effort compared to visiting physical stores.

2. Variety and Choice: Online transactions provide customers with access to a wide range of products and
services from various vendors, often on a global scale. They can explore multiple options, compare
prices, read reviews, and make informed decisions before making a purchase.

3. Cost Savings: Online transactions often enable customers to find competitive prices, discounts, and
exclusive deals. They can save money by avoiding travel expenses and taking advantage of online
promotions and special offers.

4. Seamless Experience: Online transactions offer a seamless and user-friendly experience. Customers
can easily navigate through websites or mobile apps, add items to their carts, and complete transactions
with a few clicks. Features like saved payment information and personalized recommendations
enhance the overall shopping experience.
5. Accessibility: Online transactions break down geographical barriers, allowing customers to access
products and services that may not be available locally. This is particularly beneficial for customers in
remote areas or those with limited access to specific goods.

• Benefits for businesses –

1. Expanded Market Reach: Online transactions open up global market opportunities for businesses. They
can reach customers beyond their local area, expanding their customer base and potentially increasing
sales and revenue.

2. Cost Efficiency: Online transactions can be more cost-effective for businesses compared to traditional
brick-and-mortar operations. They eliminate expenses associated with physical store setup,
maintenance, and staffing. Businesses can operate with reduced overhead costs while still reaching a
wide customer base.

3. Data-driven Insights: Online transactions generate valuable data that businesses can analyze to gain
insights into customer behavior, preferences, and trends. This data can inform marketing strategies,
product development, and customer relationship management, leading to improved decision-making.

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4. Direct Customer Engagement: Online transactions enable businesses to directly engage with
customers through various digital channels. They can gather feedback, respond to queries, and build
relationships,fostering customer loyalty and trust.

5..Enhanced Marketing Opportunities: Online transactions provide businesses with targeted

marketing opportunities. They can use digital marketing techniques like personalized ads, social
campaigns, and email marketing to reach their desired audience and drive customer acquisition and
retention.

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 EFFECT OF THE ONLINE PAYMENTS ON MARKET :
• Small Vendors
The effect of online transactions on small vendors can have both positive and negative impacts.

Here are some positive effects to consider:

1. Increased Reach and Market Access: Online transactions enable small vendors to expand their
customer base beyond their local area. By selling products or services online, they can reach a wider
audience, potentially leading to increased sales and revenue. Online platforms also provide opportunities
to target specific customer segments, attracting customers who may not have been aware of the vendor's
offerings otherwise.

2. Cost Reduction: Online transactions can help small vendors reduce operational costs compared to
traditional brick-and-mortar establishments. They can eliminate or minimize expenses associated with
physical store setup, maintenance, and staffing. Online platforms offer a cost-effective way to showcase
and sell products without the need for extensive physical infrastructure.

3. Enhanced Customer Engagement: Online transactions provide small vendors with opportunities to
engage and interact with customers in meaningful ways. Through various online channels, vendors can
communicate product details, offer personalized recommendations, and gather customer feedback.
Building strong customer relationships can lead to increased customer loyalty and repeat business.
Here are some negative effects to consider:
1. Technical and Operational Challenges: Small vendors may face challenges related to technology
adoption and operational adjustments when transitioning to online transactions. They need to invest in
suitable e-commerce platforms, learn to manage online inventory, handle shipping and logistics, and
maintain cybersecurity measures. Overcoming these challenges may require additional resources,
expertise, and training.

2. Dependency on Online Platforms: Small vendors relying solely on online transactions may become
heavily dependent on the platforms they use. Changes in platform policies, algorithms, or fees can
significantly impact their business. Diversifying sales channels and exploring multiple online
platforms can mitigate the risk of over-reliance on a single platform.

3. Trust and Security Concerns: Small vendors may face customer skepticism or concerns regarding
online transactions, particularly if they are relatively unknown or lack established reputations. Building
trust through secure payment systems, transparent policies, and positive customer reviews becomes
essential for vendors to overcome these concerns.

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 MIDDLEMEN
The middlemen consider that if things get completely online it will affect them in ‘some sort of
mixed’manner.
Here are some positive points for consideration:

1. Transformation and Adaptation: Middlemen who recognize the shift towards online transactions have
the opportunity to adapt their business models and embrace digital platforms. They can evolve from
traditional intermediaries to online aggregators, marketplaces, or value-added service providers. By
leveraging technology and providing unique value propositions, they can continue to play a relevant
role in the online transaction ecosystem.

2. Value-Added Services: While online transactions can bypass certain middlemen, there are still
opportunities for intermediaries to provide value-added services in the online marketplace. They can
offer services such as logistics, warehousing, quality assurance, customer support, or specialized
knowledge and expertise. By providing these services, middlemen can differentiate themselves and
remain relevant in the online ecosystem.

3. New Opportunities: Online transactions can create new opportunities for middlemen to enter niche
markets or cater to specific customer segments. They can leverage their expertise, networks, and
relationships to provide specialized services or products that are not easily accessible or understood by
customers in the online space.

Every coin has 2 sides; the negative key points from a middlemen’s point of view are as following:

1. Disintermediation: Online transactions have the potential to eliminate the need for certain middlemen
in the supply chain. Direct online transactions between customers and businesses can bypass
intermediaries such as wholesalers, distributors, or agents. This can lead to a reduction in their role or
even their exclusion from the transaction process.
2. Reduced Margins: Middlemen often earn their profits through markups, commissions, or fees added
to the transactions they facilitate. With online transactions, customers can connect directly with
businesses, resulting in reduced or eliminated fees paid to middlemen. This can impact their profit
margins and financial viability.

3. Increased Competition: Online transactions enable businesses to reach customers directly, reducing
their reliance on traditional distribution channels. As a result, middlemen face increased competition
from businesses that can now sell directly to customers, potentially affecting their market share and
profitability.

It is important to note that the impact of online transactions on middlemen can vary across industries and
sectors. In some cases, middlemen may face challenges and disruptions, while in others, they may find
new avenues for growth and adaptation. The extent of their ability to adapt, innovate, and provide unique
value inthe online transaction landscape will determine their long-term viability and success

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  AVERAGE BUSINESSMAN
Online transactions can have significant effects on an average business person. Here are some key effects to
consider:
1. Increased Market Access: Online transactions enable average business people to reach a larger
customer base beyond their local area. They can expand their market reach, potentially leading to
increased sales and business growth. By utilizing online platforms, they can access customers from
different regions or even globally.

2. Cost Savings: Online transactions can be cost-effective for average business people compared to
traditional brick-and-mortar operations. They eliminate the need for physical store setups, reducing
overhead costs such as rent, utilities, and maintenance. This allows business people to allocate their
resources more efficiently and invest in other areas of their business.

3. Flexibility and Convenience: Online transactions offer business people the flexibility to operate their
businesses at any time and from anywhere. They can manage their online storefront, process orders,
and communicate with customers remotely. This convenience allows them to maintain a work-life
balance and cater to customers' needs more effectively.

4. Access to Analytics and Insights: Online transactions generate valuable data that average business
people can leverage to gain insights into customer preferences, purchasing patterns, and market trends.
Analyzing this data can help them make informed decisions about their product offerings, marketing
strategies, and customer engagement. This data-driven approach can help business people optimize
their operations and improve their competitiveness.

5. Adaptation to Changing Consumer Behavior: Online transactions align with the evolving consumer
behavior and preferences. Many customers prefer the convenience of online shopping and are increasingly
comfortable making purchases through digital channels. By embracing online transactions, business
people can cater to the changing demands of their customers and stay relevant in a digital marketplace.

However, it's important to note that transitioning to online transactions may also present challenges for average
business people. They may need to invest in technology infrastructure, website development, online
marketing, and logistics to effectively manage online operations. Moreover, competition in the online space
can be intense, requiring business people to differentiate themselves and continuously innovate to attract and
retain customers.
Overall, online transactions can provide numerous opportunities for average business people to expand their
market reach, increase efficiency, and compete more effectively. By embracing the digital transformation and
leveraging online platforms, average business people can unlock new growth potentials and navigate the
evolving business landscape.

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 DIGITAL PAYMENTS
Digital payments
A digital payment, sometimes called an electronic payment, is the transfer of value from
one payment account to another using a digital device such as mobile phone POS(point of
sales) or computer, a digital channel communication such as mobile wireless data or
SWIFT(society for the worldwide interbank financial telecommunication). This definition
includes payments made with bank transfers, mobile money and payment cards including
credit, debit and prepaid cards.

Digital payments are payments done through digital or online modes, with no exchange of
hard cash being involved. Such a payment, sometimes also called an electronic payment (e-
payment), is the transfer of value from one payment account to another where both the payer
and the payee use a digital device such as a mobile phone, computer, or a credit,
debit, or prepaid card.

The payer and payee could be either a business or an individual. This means that for digital
payments to take place, the
payer and payee both must have a bank account, an online banking method, a device from
which they can make the
payment, and a medium of transmission, meaning that either they should have signed up to a
payment provider or an intermediary such as a bank or a service provider

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 Importance of Digital Payments
1.Cost Savings :

Digital Payments will reduce a huge amount of cost that governments and companies used
to invest.

2. Accessibility and Convenience :

Using digital payment modes is very easy. You can make online payments within a
second. In case of a contactless transaction, you need to hover your card over the
payment equipment. People can use it using any mobile device.

3.Lower Risk :

Online payment gateway will securely send the important transaction details. There is no
specific time for making an online transaction, you can do it whenever you want.

4.Trace Everything :

The best part of using digital payment mode is that you can trace your transaction.
5.Future of Digital Payment :

After the arrival of COVID-19, the online payment industry is booming. Various digital
payment companies are doing their hardest to encourage digital payment methods.
There is no doubt that the post pandemic era will be the era of digital payment mode.
There are several enterprises that have introduced advanced payment terminals as
technology progresses. This payment terminals would make it easier for retailers to take
payments via credit card. Customers would now have the option to make deposits in a
comfortable manner. As a consequence, for small merchants, the digital payment mode
will be a blessing in disguise.

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 Advantage of digital payments
1. Instant Payment :

Electronic payments are much faster than the traditional methods of payments such as cash or cheques. In
the case of online payments, you do not have any constraint of time or location. You can easily make
payments at any time from anywhere across the globe. E-payment systems have eliminated the need for
going to the banksto make payments. Now your customers do not have to waste their time standing in the
long lines at banks. They can easily pay you by using an electronic payment app.

2. Higher payment security :

Despite its robust features, electronic payments systems has not become so popular among the
merchants. They are still using the same old methods for accepting payments. Due to which, they are
missing out the opportunity for serving more customers. Electronic payment systems offer you multiple
ways of securing yourpayments such as tokenization, encryption, SSL, etc. Now your customers do not
have to enter their card
details every time as they can save their card details or complete their transactions by using a One Time
Password.

3. Better customer convenience :

Electronic payments can help you to provide convenient payment experience to your customers. It allows
your customer to purchase goods on credit by offering them with the pay later facility. Instead of sending
constant reminders for payment to your customers, you can automatically collect money after a specific
period.

4. Saves processing costs :

If you want to provide payment services to your customers then you first need to tie up with a card
processor. The processor will provide you with a payment gateway for processing and in exchange, it will
charge a fixed cost from you. This cost is very high. On the other hand, if you are using an electronic
payment system in your business then you do not have to incur such high charges. You just have to pay a
fixed subscription to your service provider.

5. Low risk of theft :

The phrase ‘Cash is the king’ is popular in the business world, but this king has also had some limitations.
If you are using cash for accepting payments from customers, chances are there it can be stolen. Also,
you need to take high safety measures in depositing cash into your bank account.
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 Disadvantage of digital payment

1. Security Concerns :

Although stringent measures such as symmetric encryption are in place to make e-

payment safe and secure, it is still vulnerable to hacking. Fraudsters, for instance,
use phishing attacks to trick unsuspecting users into providing the log-in details of
their e-wallets, which they capture and use to access the victims' personal and
financial information. Inadequate authentication also ails e-payment systems.
Without superior identity verification measures like biometrics and facial
recognition, anyone can use another person's cards and e- wallets and get away
without being caught. These security concerns may make some people reluctant to
use e-payment systems.

2. Disputed Transactions :

If someone uses your company's electronic money without your authorization, you
would identify the unfamiliar charge and file a claim with your bank, online payment
processor or credit card company. Without
sufficient information about the person who performed the transaction, though, it
can be difficult to win the claim and receive a refund.

3. Increased Business Costs :

E-payment systems come with an increased need to protect sensitive financial

information stored in a business's computer systems from unauthorized access.
Enterprises with in-house e-payment systems must incur additional costs in
procuring, installing and maintaining sophisticated payment-security technologies .

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 EXAMPLES OF E-PAYMENT SYSTEMS

SOME OF THE EXAMPLES OF E-PAYMENT APPS ARE;

Amazon Pay:

Amazon Pay is an online payments processing service that is owned by Amazon,

launched in 2007. Amazon Pay uses the consumer base of Amazon.com and focuses on
giving users the option to pay with their Amazon accounts on external merchant
websites. Amazon has pulled the curtains on its Flexible Payment Service (FPS) and
launched it in limited beta. FPS is not so much a consumer payment solution with
heavy marketing but more a payment platform that can be used by developers to build
payment solutions in the spirit of Amazon’s S3 storage product (e-Commerce
enabler). It offers send and receive money using credit card, bank account, or Amazon
Payments balance transfer as payment methods. It also create “Payment Instructions” to
define conditions and constraints desired for a given transaction, and programmatically
obtain payment authorizations or “tokens” that represent these Payment Instructions from
customers. It also execute one-time, multiple, or recurring payments on behalf of
customers. Aggregate micro-transactions into a single large transaction using Prepaid
and Postpaid capabilities. It has also build payment applications where you are neither the
sender nor the recipient of funds. You can build marketplace applications that enable the
movement of money between two third parties. We can also view account balances,
transaction histories, and transaction details on the Amazon Payments website. FPS has to
be integrated into a shopping cart to be available to buyers as a payment option and
as such it does not compete against other payment modes. Amazon is one of the strongest
online brands with immediate trust and millions of registered users that have probably
successfully bought something on Amazon without worry. As a payment platform,
however, Amazon has taken a leadership role with FPS. We are likely to see new
business models emerge and niche payment problems solved in particular micro-
payments.

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Paytm:
Paytm was founded in August 2010 with an initial investment of $2
million by its founder Vijay Sharma in Noida, a region adjacent to India’s
capital New Delhi. It started off as a prepaid mobile and DTH recharge
platform, and later added data card, postpaid mobile and landline bill payments
in 2013. By January 2014, the company had launched the Patym wallet, which
the Indian Railways and Uber added as a payment option. It launched into
e-commerce with online deals and bus ticketing. In 2015, it unveiled more
use-cases like education fees, metro recharges, electricity, gas, and water bill
payments. It also started powering the payment gateway for Indian Railways.
In 2016, Paytm launched movies, events, and amusement parks ticketing as
well as flight ticket bookings and Paytm QR.Later that year,it launched rail
bookings and gift cards. Paytm’s registered user base grew from 11.8 million
in August 2014 to 104 million in August 2015. Its travel business crossed $500
million in annualized GMV run rate, with 2 million tickets booked per month.
In 2017, Paytm became India’s first payment app to cross over 100
million app downloads. The same year it launched Patym Gold, a product that
allowed users to buy as little as Rs1 of pure gold online. It also launched Paytm
Payments Bank and ‘inbox’, a messaging platform with in-chat payments
among other products. By 2018, it started allowing merchants to track their
payments and day-to-day settlements instantly. This led its merchant base to
grow to more than 7 million by March 2018. The company launched two new
wealth management products – Paytm Gold Savings Plan and Gold Gifting to
simplify long-term savings. In January 2018, Paytm entered into a joint
venture with Alibaba Group-owned gaming company AGTech Holdings to
launch Gamepind, a mobile gaming platform. Gamepind was later rebranded
as Paytm First Games in June 2019.

PhonePe:

FxMart received its license to operate on 26 August 2014. PhonePe was incorporated in
December 2015. In April 2016, the company was acquired by Flipkart. And as a part of the
Flipkart acquisition, the FxMart license was transferred to PhonPe and it was rebranded as
35
the PhonePe wallet. PhonepPe’s founder Sameer Nigam was appointed as the CEO of the
company. In August 2016, the company partnered with Yes Bank to launch a UPI-based
mobile payment app, based on the government-backed UPI platform. Within 3 months of
launch, the app was downloaded by over 10 million users. In 2018, PhonePe also became
the fastest Indian payment app to get a 50 million badge on the Google play store. The
PhonePe app overtook BHIM to emerge as the market leader in UPI transactions in
August 2017.

Google Pay:
Originally launched as Android Pay, the service was released at Google 2015. Android Pay
was a successor to and built on the base established by Google Wallet which was released
in 2011. It also used technology from the carrier-backed Soft card. Google had acquired its
intellectual property in February 2015. At launch, the service was compatible with 70%
merchants. Google Wallet still powered web-based Play Store purchases and some app-
based peer-to-peer payments, for instance in Gmail. In 2016, Google began a public trial
in Silicon Valley of a related mobile app called Hands Free. In this system, the customer
does not need to present a phone or card. Instead a customer announces they wish to “pay
with google” and give their initials to the cashier, who verifies their identity with a photo
previously uploaded to the system. The customer’s phone will only authorize payment if its
geographic location system indicates it is near a participating store. On September 18
2017, Google launched an UPI-based app Tez in India. On August 28 2018, Google
rebranded Tez to Google Pay. On January 8 2018, Google announced that Google Wallet
would be merged into Android pay, with the services as a whole rebranded as Google Pay.
This merger extends the platform into web-based payments integrated into other Google
and third-party services. The rebranding began to roll out as an update to the Android Pay
app on February 20, 2018. The app was given an updated design and now displays a
personalized list of nearby stores which support Google Pay. On December 21 2018,
Google Payment, obtained an e-money license in Lithuania – the license will Google to
process payments, issues money, and handle electronic money wallets in the EU.

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MobiKwik:

It is an independent mobile payment network that supposedly connects 25 million

users with 50,000 retailers and more. It was founded in 2009 Guru gram. It provides a
digital wallet and mobile based payment services. MobiKwik allows its users to use
cards, net banking and even cash on delivery service for the purpose of paying bills,
recharge and shop in the market. Recently MobiKwik has tied up with grocery,
restaurants and other offline merchants which are large and small time. There are total
10,000,000+ numbers of installs of MobiKwik .

PayPal:
PAYPAL An American company is operative in a global online payments system that
supports online money handovers and serves as an electronic alternative to traditional
payments methods.

E-Bay is the parent company of PAYPAL. PayPal is the faster, safer way to send
money, make an online payment, receive money or set up a merchant account.
PAYPAL operates as a payment processor for online vendors, auction sites, etc.
PayUMoney It is a Gurgaon based company which provides online payments solutions
and enables the users to store cash and make payment for various transactions, goods
and services. In order to differentiate themselves from other players, they provide a
wide range of benefits that include one- touch check out and discounts / cashback offers
on every transaction made. PayUMoney also ensures the right purchase and customer
satisfaction by providing instant refunds on cancellation of an order also by protecting
buyer’s right. There are total 100,000+ numbers of installs of PayUMoney.

BHIM:

It is a mobile app, developed by the National Payments Corporation of India. It is

based on the Unified Payment Interface (UPI), where the bank details or even internet
is not required to make payments. Simply
using mobile number, aadhar card number, name or any banks UPI ID anyone can send
or receive money in any preferred language.

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ADVANTAGES AND DISADVANTAGES OF UDING E-PAYMENTS

E-payment is something that allows people to pay for things through their
phones, rather than through a credit card or cash. Advantages and
Disadvantages of the application are listed below.

Advantages

• Faster to pay for things

• Very secure

• Eliminates the need for some to carry around a wallet

• Easy to use

• Free to use.
Disadvantages

• Having virtual money source may encourage people to spend more than they
have.

• One would have to take his or her phone out more often to pay for things

• People are more likely to glance over and steal your pin number

• It’s not usable at every single store

• It doesn’t work with some credit cards.

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 IMPORTANCE OF CASHLESS TRANSACTIONS
i. There is no fear of robbery or theft:-
When physical cash is in large amount it is difficult to carry cash as there is danger of theft, but in
cashless transaction this fear is eliminated.

ii. Tracking of expenses:-

When the transactions are done in cashless way through e-wallets or internet banking we can keep a track
on all our expenses which becomes easier to determine how much is our total expenditure. With the help
of cashless transactions a customer can make payments in exact denominations i.e if you have to pay Rs
299.89you can pay the same when you use cashless mode of payment.

iii. Transparency and accountability:-

In cashless economy as there is more currency in the bank which means there is more currency in
circulation, which means greater liquidity and there is less scope of hiding income which eventually leads
to lower interestrates which leads to better economic development of the country.

iv. No tension about counterfeit currency:-

Every economy in the world faces the problem of counterfeit currencies, while the government is taking
stringent actions against counterfeit currencies but the common people are the ones who suffer in these
counterfeit currencies. But when an economy adopts cashless or digitization then the hassles about
handling counterfeit currency is sorted.

v. Easier Accounting and Easier transactions:-

By going cashless customer can complete a transaction in a more convenient manner than before and can
complete the transaction with increased security. A customer can do direct bank to bank transactions
withoutphysically transferring or depositing the cash to the bank this saves time, money and efforts.

vi. Decrease in cost and Economic growth:-

If the whole nation will go cashless then there will be decrease in cost for printing of notes. RBI spends
around Rs 12,000 crores on replacement of Rs 500 and Rs 1000 notes. By going cashless there will be
improvement in government monetary policy and government revenue as well as there will be greater
transparency and efficiency in the economy.

vii. It would curb the black money entering the system. An economy that is majorly cash-
based givesadvantages to criminal activities like terrorism, human trafficking, drug trafficking,
etc.

viii. In a Cashless Economy, the circulation of fake currency notes can be reduced.

ix. It would lead to an increase in the tax base, as it is difficult to avoid proper payment in a cashless
society.

x. In a Cashless Economy, the transaction of funds gets easier across the country. The transfer of
money canbe done with ease.

39
xi. A cashless Economy leads to digital transactions, which bring better transparency and
accountability.

These are some of the importance of cashless transactions.

CHALLENGES OF BANK AND CARD COMPANY

1. Understanding customer expectations

The current generation of digital natives has high expectations of their FIs —
namely, that service be comprehensive, fast, and tailored to their specific needs (or
better yet, identifies their needs before they themselves even become aware of
them). Many traditional banks and credit unions struggle to meet these demands
through technology, even though half of their users rely primarily on mobile
banking solutions (86.5% of Americans used a mobile device to check their bank
balance in 2020 alone).

On the other hand, 62% of respondents to a 2021 survey by goMoxie (now NICE
customer experience solutions) said that they still prefer a bank or credit union with a
physical presence. This presents a challenge to banks and credit unions: how to balance
current technology and great human capital without letting either fall by the wayside.

This starts with finding out what your customers want through feedback surveys or
other tools. For example, referrals allow institutions to provide a deeper level of
service by better understanding their customers’ or members’ needs. Referral-and-
reward programs — which benefit both employees and customers — are a great way
to incentivize your team to deliver excellent customer service.

2. Optimizing the mobile experience

COVID-19 has had a major impact on the need for FIs to prioritize mobile and non-
traditional delivery methods, such as two-way video banking. If given the choice,
today’s customers are much more likely to choose digital banking over in-person,
and a bank or credit union without a digital presence will simply get left behind.

Mobile strategies help FIs stay competitive and are a major factor in customer
satisfaction and retention. Plus, customers have gotten much more accustomed to
mobile money management through tools like Zelle, Venmo, and Apple Pay, so there’s
little likelihood of a UX learning curve.

3. Leveraging social media to increase foot traffic

Social media has come a long way from status updates and photo sharing.
Nowadays, it gives brands a chance to build relationships with their customers that
40
 can seamlessly translate to face-to-face interactions, provided these brands have a
cohesive, multi-channel customer engagement strategy.

Through customer contests and event promotions, retail banks and credit unions have
a huge opportunity to leverage social media to get more people in their doors. Engage
your staff in running social media campaigns that feature real employees, giveaways,
and user-generated content accompanied by a unique hashtag. Efforts like these will
communicate your brand’s customer-first approach and encourage your followers to
pay you a visit.

What’s more, you can extend this virtual experience by incorporating digital
elements into your physical space, including digital signage, touchscreen
technology, and video walls.

4.Security and authentication

Whenever a new tech solution makes its debut, someone tries to hack it. Despite the
growing popularity of mobile banking, security breaches continue to pose a significant
threat. Though they can offer secure authentication for self-service solutions in their
physical branches, FIs will need to ensure their mobile platforms can provide the same
level of data security. Doing so is crucial for instilling and maintaining trust in your
brand.

5.Fintech competition

Short for financial technology, fintech refers to software that can replace human-
powered financial services, such as payment processing, loan application, financial
advising, and cryptocurrency. This last item poses a major disruption to the banking
industry, though fintech as a whole is not likely to replace the traditional bank or credit
union anytime soon.

If they have the capability, smaller banks and credit unions can partner with fintech
entities or sponsor programs that research and develop new fintech solutions.
Partnerships like this can position an independent FI as a savvy industry player.

6.Omnichannel reach

Though banks and credit unions should take a multi-channel marketing approach to
customer engagement, that does not mean using every possible channel. (For example, if
no one’s going to engage with your FI on Pinterest, best to leave that account on the
shelf.)
With insights based on market analysis — plus well-allocated marketing dollars — you
can utilize traditional, digital, and social tools to reach and engage with your customers
and members on the platforms they actually use.

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 7.Internal change

For the better part of the 2010s, financial industry recruiting efforts have been
prioritizing digital expertise and innovation in applicants. Today, roles like Chief
Innovation Officer and Customer Experience Director
are responsible for meeting and anticipating customer expectations, with a strong emphasis
placed on digital innovation.

Adopting new technologies may also mean that the traditional teller role will need to
transition into someone with a more diverse set of skills. The increasingly popular
“universal banker” is someone who can deliver more complex financial services while
self-service solutions cover routine transactions.

8.Adopting AI

Artificial intelligence is increasingly used in finance to predict customer preferences and

make risk assessments. However, many (especially smaller) banks and credit unions
struggle to adopt AI because they lack a clear AI strategy. There is also the pervasive
fear, and not just in the banking industry, that robots will take our jobs.

While AI helps banks and credit unions achieve more than they thought would be
possible even 10 years ago, there is no substitute for human discretion and expertise
when it comes to complex financial
services. Comprehensive employee education and training programs will ensure that
even the most powerful AI solutions won’t eclipse the flesh-and-blood financial advisor.

9.Regulatory compliance

As regulations become heavier and more complex, banks and credit unions must
allocate more of their budget to compliance. Though evolving regulations are
impossible to avoid, FIs that adopt scalable processes, staff roles, and tech
solutions will be well-positioned to respond to changing regulatory tides.

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 10.Increasing pressure from competition

As integral as your local financial institution is to the fabric of your community,

Accenture found that 31% of banking customers would consider banking with
non-financial platforms like Facebook,
Amazon, or Google if they started offering financial services. This speaks to many
customers’ preference for ease-of-use; if they can shop, transfer money, and click
“Purchase” all in one app, why not? Additionally, financial startups like Robinhood and
Acorns have positioned themselves to be the one-touch answer to investing, looking to
take the advisor out of the equation.

Banks and credit unions can counter this challenge by promoting the human talent
they have on tap. App- only banking is impersonal and subject to glitches (including
security breaches), so an FI that can offer expert guidance alongside innovative tech
solutions can remain a cut above competing tech.

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 FUTURE OF ONLINE PAYMENTS IN INDIA
Smartphone and mobile phone users, internet users as shown in the above projections are
increasing with the increase in population in India. The above graph is compared between
two years i.e 2015 and 2023. With greater access to internet and growth and development
of infrastructure and greater usage of smartphones there is significant development of
digital payments in India. India is witnessing exponential growth in Digital payment
industry as India is considered as the second largest in the world in case of mobile users
with a Billion connections in the country. In India nearly 1.5 billion transactions take
place every single day and most of these transactions are P2M transactions i.e person to
merchants which means purchases like grocery, newspaper, mobile recharges, DTH
recharges, ticket bookings, cab booking etc. Earlier in the year 2015 all the transactions
were cash transactions now it is estimated that by 2030 transactions in India will be more
digitally and will rule the market with the increasing number of smartphone and internet
users.
By the year 2025 in India it is estimated that cashless transactions would be 80 % and the
volume of the digital transactions would reach up to $ 1 trillion. In India it will take time
to become a completely cashless society as it will require the support and understanding
by the public and various initiatives by the government. In India the lack of digital
literacy and education in rural areas can be a hindrance towards a cashless society.
It is very important to encourage people to adopt cashless modes of payment by giving
various cash back offers which is been provided by the payment apps whether private or
government initiated payment applications. By making the payment process simpler, safe,
transparent it will become easier for people to access.

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 CUSTOMERS’ SATISFACTION TOWARDS ONLINE
PAYMENT

CUSTOMERS’ SATISFACTION TOWARDS ONLINE PAYMENTS

Customer satisfaction is the key factor for companies to retain their customers, build
customer loyalty and gain more profits (Reichheld, 1996). Customer satisfaction is also
described as the capability of an organization to accomplish the Emotional, business and
psychological needs of the potential customers. Security can improve customer
satisfaction by providing personalized services to them, and customers will be reluctant to
change to other companies if organization were able to verify that and maintain
information on participants in the banking services that the electronic banking service
does not allow the use of personal information to clients and customers as well as banks
do not allow the use of personal information must be characterized by secure electronic
banking service in the authorized banking operations. Customers may feel the E-system
trustworthy, service provider keep their promises and commitment, keep the identity
secure and customers may feel safe and secure while doing transaction. Security and
preserving privacy have a large impact on the trust of users in a technology (Polatoglu &
Ekin, ).Fears of hackers and privacy invasion compound the uncertainty surrounding
online services (Yap et al., 2010). Service quality has been determined as an analytical
factor of success for the organization through which the organization can formulate their
competitive advantage as well as to enhance their competitiveness. Pioneered by
Parasuraman et al. (1988) described that the SERVQUAL instrument comprises of five
distinct dimensions. The dimensions of SERVQUAL include tangibles, reliability,
responsiveness, assurance and empathy (Parasuraman et al., 1988). Rod et al. (2009)
argued the association among the service quality of internet banking and customer
satisfaction in New Zealand by using SERVQUAL instrument, having 300 sample size
who are the regular users of internet banking. The results of the study show that the
dimensions of service quality of internet banking have a positive as well as an indicative
relationship with the customer satisfaction. It has been recommended by the researchers
that the management of online service providers of banks be compelled to constantly
analyze the level of fulfilment of the requirements and demands of customer with the
site of thecompany, if they desire to endure the customers loyal with their online
services. Quality is customer’s evaluation of the excellence in the performance of goods
or service.

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 LITERATURE REVIEW
In their study on “Digital Payment in India with Perspective of Consumer Adoption” they said that due to
demonetization it’s resulted tremendous growth in digital payments. These transformations make a great
change toward digital payments and make a more transparency in transactions which empowers the
economy of the country. The purpose of this study is to get a research the impact of demonetization on
adoption of online payments and digitization of payment system to analyses the level of adoption of
digital payment system by the customers’ E-payment system are important mechanism used by the
individual and organization as a convenient way of making payments over the internet and at a same time
a gateway to technological advancement. The campaign of digital India made a noticeable effect on
banking sector of India. Even the development in digitalization still India lagging behind in the
implementation of digitalization to banking sector and It is true the digitalization of banking will bring
revolution in the Indian economy but it is still needed to implement digital services in rural areas also. It’s
related with many conceptual issues and challenges in implementing digitalization of rural banking areas.
It studied about the efficiency of banking and enable smoother transactions. It helps to found the factors
which enable fast and furious changes in banking sector in adopting digitalization special references to
rural are Digital transaction is positively correlated with the level of education and consumer income. The
size of the informal economy of a nation reflects the productivity of cash use lock in persistent cash as the
inevitable status queue. There are no shortcuts to becoming irrelevant in this economy banks and other
financial institutions will have to consider reconfiguring their business processes and functioning with
Smartphone’s. The move of demonetization gives a new path to the Indian economy going towards the
digital economy. India becomes a growth country after demonetization with a potential for the companies
deals in E- Commerce. The cash crunch in the economy cut down the cash on delivery order in the
country and increase the online payments. After all this positive effects people are facing many problems
during the cash crunch. This study finds out the effects of online transactions during the period of
demonetization. India is country which is a cash dominant country,
demonetization is great cause of facing problems in India due to suddenly a huge transformation from
cash tonon cash.
Before the demonetization in India situation of E-Commerce is the accurate flat form for the development
for online business but the situation of demonetization leads the people to adopt the online transactions or
net banking in their day to day life. For urban areas E-Commerce is not a new technology but in urban
it’s necessary of loyalty towards online business. According to the authors the demonetization in India
encourage and insist the Indian people to increase or start the online transaction instead of using
traditional method of payment trough cash. Before demonetization E-Commerce companies have huge
payment on cash on delivery which decrease after demonetization it will provide a positive change in E-
Commerce.
After demonetization E-payments become a day to day part of Indian peoples. These issues provide a
research agenda to encourage the researcher to explore new knowledge. Mobile payments are also
adopted after demonetization by Indian peoples. Mobile banking are also adopted which provide by the
banks which allowsthe customers to doing transactions with their mobile devices.
Accordingly cash economy is not the complete absence of cash but a setting in which goods and services
are bought and paid through electronic media. Importance of digital transaction it reduce red tapism and
bureaucracy reduce the black money and corruption helps in accurate taxation reduce the tax corruption.
Stopthe cash related illegal activities make easier transactions.

46
 SWOT ANALYSIS

SWOT ANALYSIS OF ONLINE PAYMENT SYSTEM

Strengths
Some of the main stíengths aíe as follows;

1. Worldwide Operations

Online Payment has reached and provided online funds transferring services in more
than 200 countries worldwide. It gives the company a competitive edge in the online
payment industry. Now, this system is moving into Rural Areas of developing
countries as well to mark its territory.

2. Large Number of Customers

Online Payment System has a large number of customers database in the online money
transferring industry. According to a study, the company had approximately 603 million
active users as of 2023. Over 80 million users use its one-touch feature. The number of
merchant accounts was 29 million in the year 2020. It means that the majority of the
public trusts the brand.

3. Variety of Services
E-Payment deals with a variety of customers and merchants. Therefore, the company
offers different types of services to its users. It provides Cash Back service, Wallet
Service etc.

4. Strong Tech Background

E-Payments is equipped with the latest technology and a better security system.
5.User Friendly
The interface of Online Payment is user-friendly. The merchants and ordinary users can
easily create an account and transfer funds with a few simple clicks. If any of the
competitors would like to copy the interface of PayPal, then they would require a
developer and a programmer. It’s user-friendly for the users, but it doesn’t mean that
you can copy it.

6Active Users
As we know that e-payment has approximately 305 million at the beginning of 2023.

47
WEAKNESSNESS
1. Exposure to Fraudulent Activities
It’s no doubt that electronic transaction is simple, easy, and convenient.
But it also involves risk at the same time. Therefore, you need technical
support and a secure system to conduct the transaction and transfer funds.
It’s because there have been instances of cyber-attacks where hackers have
stolen the private data of users and misuse it later on.

2. High Service Fee

Some of the financial critics have criticized that e-payments charges high
fees on card authorization, transactions, chargebacks, and international
cards. High service fees push away potential newcomers. The brand
should give some new offers to its new customers.

3. Controversies
There has also been some news and controversies about this that e-
payment withholds funds, and freezes the accounts of some of the users. If
there’s any truth in those controversies, then it’s very bad for the brand
image of Online Payment System.

4. Depends on Internet Connection

The whole transaction system of transferring and receiving of funds, and
creating an account is dependent on the internet and speedy connection. It
can work in the advanced and developed. But in the emerging economies
and under-developed countries, where internet connectivity is a serious
issue, e-payment services would be useless there.

48
 OPPORTUNITUES

1.Move Towards Lower Cash Economies

Developing economies like India are planning to become either cashless
or lower cash economies. It provides a great opportunity for e-payment to
expand its services there to take advantage of the opportunity.

2.Digital Cryptocurrency
The usage of digital crypto-currency like bitcoins is becoming common
nowadays for freelancers and online users. Many platforms even accept
crypto-currency. It has increased because of many factors like digital
literacy, internet connectivity, and the internet. It also presents an
opportunity for e-payment to either launch its currency or start accepting
it.

3.Wide scope in future

There are 100% chances that cash transactions will be removed in future
by using cashless transactions or digital payments.

THREATS
.
1. StrongEconomic Regulations & Policies
Some countries like Taiwan, China, and Japan has strict rule and
regulations for companies like PayPal to set up their business
operations there.

2. Fraud & Hackers

When we look at the scale of the e-payment operations, then
it’s operating in more than 200 countries. It also presents a great
security risk from hackers across the world.

3. Banks/Financial Services
PayPal used to have a great advantage when banks used to work manually. But
nowadays, many banksprovide the service of online transferring of funds

49
 RESEARCH METHDOLOGY
RESEARCH METHODOLOGY
 SOURCES OF DATA

1. Primary Data:
It is the original data collected from the
respondents.This was collected through
questionnaire.
2. Secondary Data:
It includes external sources. Internal external were from websites etc.

 SAMPLE SIZE
The Sample Size of this Project is 60.

 SAMPLE AREA
The Sample Area is Gonda City.

 TOOLS FOR ANALYSIS

a. Pre-structured questionnaire is used for data collection.
b. Percentage and comparative analysis has been used.
c. Tables, charts and diagrams are used for presentations.

50
DATA ANALYSIS AND INTERPRETATION

51
1. GENDER

Gender No. of Respondents Percentage

Male 23 38%
Female 37 62%
Total 60 100%

38%

Male
Female

62%

DATA ANALYSIS AND INTERPRETATION

It is interpreted that according to my survey 62% of the females are using Online payments and 38% of the
males are using online payments.

52
 2.Age Group
Age Group No. of Respondents Percentage

18-30 40 67%

30-40 16 27%

40-60 3 5%

60 and Above 1 1%

Total 60 100%

Column1

18-30 30-40 40-60 60 and above

DATA ANALYSIS AND INTERPRETATION

It is Clear from the above Graph that most of the online payment users are from 18-30 Age Group.

53
 3.Awareness of Online Payments

Rate of Awareness No. of Respondents Percentage

Aware 40 67%

Partially Aware 16 27%

Fully Aware 3 5%

Not Aware 1 1%

Total 60 100%

DATA ANALYSIS AND INTERPRETATION

From the table and data, it shows the awareness level about the functionality of Online Payments.
Here 67% of the persons are aware about its functionality and 27% of them are partially aware, 5%
of themare fully aware, at last 1% are not at all aware about Online Payments functionality.

54
 4.Do You Prefer to Use Online Payment system?

Promote or Not No. of Respondents Percentage

Sometimes 10 17%

Up to a certain level 35 58%

Yes very much 15 25%

Total 60 100%

Sales

sometimes ceratin level yes very much

DATA ANALYSIS AND INTERPRETATION:

The table and figure gives us an outline of whether respondents use online payment system or not. Here
58%of the respondents says they us it upto a certain level, 17% sometimes prefer to use online payment
system.

55
5.How Often Do you use Online Payment System?

Recurrence No. of Respondents Percentage

Daily 6 10%

Weekly 23 38%

Monthly 26 44%

Yearly 5 8%

Total 60 100%

Yearly 8%

Daily 10%

Weekly
38%

Monthly
44%
0%
10%
20%
30%
40%
50%

DATA ANALYSIS AND INTERPRETATION

In the table and chart about 44% of them use E-wallets monthly, 38% of them use
it weekly and 10% use itdaily, at last 8% uses it once in a year.

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6.Does Online Payment is also easy as Offline Payment system?

Scale No. of Respondents Percentage

Yes 48 80%

No 1 2%

Maybe 11 18%

Total 60 100%

No
Maybe

Yes
Maybe
No

Yes

DATA ANALYSIS AND INTERPRETATION

From the data it is clear that 80% of the respondents feel like online payment system is also easy as
offlinepayment system 18% of them may or may not feel the same and only 2% does not feel like
that.

57
7.What do you think about Online Payment System?

Reasons No. of Respondents Percentage

Ease of use 39 65%

Time saving 16 27%

Security 3 5%

Wide acceptability 2 3%

Total 60 100%

Wide acceptability 3%

Security 5%

Time saving 27%

Ease of use 65 %

0% 10% 20 % 30 % 40 % 50 % 60% 70%

PERCENTAGE

ANALYSIS AND INTERPRETATION

From the above data it is clear that people prefer something which is ease of use. The data shows 27%
looksfor time saving, 5% looks for security and 3% for wide acceptability respectively.

58
4. Purpose of using Online Payment System?

Purpose No. of respondents Percentage

Money transfer 8 13%

Recharge 3 5%

Utility and Bill payment 0 0%

All of the above 49 82%

Total 60 100%

90%
80% 82%

70%
60%
50%
40%
30%
20%
13%
10% 0% 5%
0%
Utility and
Recharge Money
Bill
payment transfer All of the
above

ANALYSIS AND INTERPRETATION

Both the table and figure makes us aware that most of the respondents use Online Payments for all
theseuses mentioned above.

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5. Why do you Prefer Online Payment System?

Things to keep in mind No. of respondents Percentage

Rewards 27 45%

Cash back 15 25%

Premium offers 10 17%

Available discounts 8 13%

Total 60 100%

45%
40%
35%

30%
25%
45%
20%
15%
25%
10% 17%
13%
5%
0%
Rewards Cash back Premium offers Available
discounts

DATA ANALYSIS AND INTERPRETATION

From the data, we can understand that 45% of the respondents looks for rewards, 25% looks for cash
back,17% looks for premium offers and 13% looks for discounts available which is the least of them.

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10.Do you Face any Obstacles in Online Payment System?

Yes or No No. of Respondents Percentage

Yes 36 60%

No 24 40%

Total 60 100%

40%

60%

yes no

DATA ANALYSIS AND INTERPRETATION

From the above data, 40% of the respondents says that there is no obstacles while the remaining 60% of
them says there is an obstacle while using Online Payment System.

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 11.Which kind of obstacles do you usually face during Online Payment System?

Obstacles No. of Respondents Percentage

Security of mobile payment 23 38%

Too much time consuming to set up 8 13%

Involves danger of losing money 19 32%

Cannot be used for international transaction 10 17%

Total 60 100%

Security of mobile
payment
19 %
Cannot be used for
international
transaction
Too much time
59 % consuming to set
up
6%

Involves danger of
losing money
16 %

DATA ANALYSIS AND INTERPRETATION

The data shows us that 59% of the people sees that it cannot be used for international transaction, 19%
is confused with the security of mobile payment, 16% fear of losing money and 6% sees the setting up
of E- wallets is time consuming.

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12.Are Online Payment Easily Available in India?

Available or Not No. of Respondents Percentage

Yes 43 72%

No 2 3%

Maybe 15 25%

Total 60 100%

25 %

Yes
No
3%
Maybe

72 %

DATA ANALYSIS AND INTERPRETATION:

The above data shows that 72% of the respondents in the sample population prefers online payments
to be widely available in India, 25% thinks maybe it should be available and only 3% thinks that it
shouldn’t be widely available in India.

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13. Satisfaction towards Online Payments?

Yes or No No. of Respondents Percentage

Yes 48 80%

No 12 20%

Total 60 100%

No
20 %

Yes
80 %

DATA ANALYSIS AND INTERPRETATION:

It is Clear from above Graph that 80% of Respondents are Satisfied with Online Payment System.

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 FINDINGS
On the rate of awareness about the functionality of Online Payments only a small portion of them
arenot aware, majority are aware and the remaining portion are partially and fully aware.
a. Each and every person who uses Online Payments has done financial transactions.
b. In terms of online payments over other modes of payment some prefer online payments because
of its ease of use, some finds it is time saving and others prefer E-wallets because of its security
and wide acceptability.
c. Another finding is that some people consider online payments because of its quick transfer, some
consider it as an alternative choice and some consider
d. Most of the online payment users use it for money transfer, recharge and utility and bill payment.
Veryfew people use it for any one of the above.

e. It is understandable that majority of them uses it monthly and weekly and only a few of them
uses it daily and once in a year.
f. About the obstacles in using online payments more than half of them says ‘Yes’ and the remaining
says ‘No’ even when they say ‘No’ they do have obstacles because in the next question each and
every person finds one as a hindrance while using online payments . Some of them finds it not
safe to financial transaction even though they find it safer than other payment modes. Some of
them are afraid of losing money through hackers, others say that it cannot be used for
international transactions and some say that too much time is taken to set up.
g. It is clear from the study that only a few of them has rated online payments below neutral that
means most of them are satisfied with the E-wallets services.

h. The respondents support digital India as they support wide acceptability of online payments all
overIndia. They are interested in continuing using online payments
i. The respondents up to a certain level agree that it promote their savings and also they are
satisfied with the security of their credentials and also they would like to share information with
their friendswho are not aware about this specific online payment service.

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 SUGGESTIONS
THE SUGGESTIONS ARE AS FOLLOWS:
1. In the study, whenever students use E-wallets they look for new features like premium offers and
discounts and therefore new features can be introduced among them and more students will be
attractedto E-wallets.
2. Among the students most of them supports Online Payments as a place for saving and therefore
savings scheme should be improved among all the Online payments
3. India supports digital marketing and this is to spread Online Payments useage among
shopkeepers so that people can use online payments anywhere and they wouldn’t need to carry
physical money with them.
4. Inorder to make the transactions more safe, fast and flexible the connection of banks with these –
online payments need to be improved a lot.
5. After the birth of Google pay everybody has shifted their e-wallet to Google pay as they have
more features, offers and rewards than the other wallets mentioned and therefore they have to
improve theirfeatures inorder to become a successful wallet.

66
 CONCLUSION
The conclusion of this research project is;

The E-payment or E-wallets adoption was much more than what we had anticipated at our initial
assumption. Many E-wallets like Paytm, Phonepe, Amazon Pay and Google pay were introduced and got
wide acceptability. Everyone who uses E-wallets are satisfied with their services. From the data collected
it is clear that none of them were unsatisfied with E-wallets, also people find it as more secure than its
competitors. But still many others prefer direct banking transactions due to fear of losing money, safety
issues and also due to lack of knowledge about internet. This study was focused on college students and
therefore their response does not equalize to the response of elder generations. The study makes us
understand that today’s generation is much more up to date to innovations and technologies as everything
is on their finger tip. Therefore, E-wallets has to make use of this to make more awareness about the
usability of the applications to those people who are illiterate about the technology and internet which in
turn leads India to a cashless future.

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 BIBLIOGRAPHY

THE WEBSITES FROM WHERE I DID RESEARCH OF THIS PROJECT ARE;

i. https://en.wikipedia.org/wiki/Google Pay
ii. https://en.m.wikipedia.org/wiki/Digital wallet
iii. https://www.researchgate.net/
iv. https://www.academia.edu/
v. https://shodganga.inflibnet.in

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APPENDICES

69
 QUESTIONNAIRES
1. What is The Gender of the Consumer?
a. Male
b. Female
2. What is the Age Group of the
Consumer?a. 18-30
b. 30-50
c. 50-60
d. 60 and Above
3. Are you Aware of Online Payments?
a. Aware
b. Fully aware
c. Partially aware
d. Not aware
4. Do You Prefer to Use Online Payment system?
a. Yes
b. No
5. How often do you use online payment system?
a. Daily
b. Weekly
c. Monthly
d. Yearly
6. Does Online Payment is also easy as offline payment system?
a. Yes
b. No
c. Maybe
7. What do you think about online payment system?
a. easy to use
b. time saving
c. security
d. wide acceptability

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8. What is the purpose of using online payment system?
a. money transfer
b. Recharge
c. Bill Payment
d. All of the above
9. Why do you prefer online payment system?
a) Quick transfer
b) Exciting rewards
c) More secure
d) Alternate choice
10. Do you face any obstacle in online Payment System?
a. Yes
b. No
11. Which kind of obstacles do you usually face during Online Payment System?

a. Security of mobile payment

b. Too much time consuming to set up

c. Involves danger of losing money

d. Cannot be used for international transaction

12. Are online payment easily available in India?

a. Yes

b. No

13. Are you satisfied with online payments?

a. Yes

b. No

71