Challenges of Digital Payments Growth in India

Challenges of Digital Payments Growth in India

Digital Payments

The concept of digitizing payments has been encouraged a lot by the Government of India for many years, COVID-19 is one primary reason which gave the most vigorous push to the idea of transforming from traditional ways of payment to digital modes. It became mandatory for businesses to serve customers with digital payment options.

Exponential Rise in Digital Payments

Incredible figures, with over 40% of yearly growth seen in digital payments at the end of Sep-2021, are still on the rise. The significant share for digital payments for businesses is offered by Unified Payment Interfaces (UPI). This growth is not going to rest anytime soon. UPI Payment, and other forms of digital payment methods, are expected to see a steep increase in the coming years and could touch a mark of 71.7% by 2025.

Undeniably, it is a significant challenge to sustain the exponential growth while digitizing small and large businesses. This notion took magnificent leaps and was considered by the digital India payment gateway companies, which showed incredible innovation and implementation of the latest technologies, cutting-edge protocols, safe and secure services, along with hassle-free installations. Though it is not an easy task for the implementation companies, businesses in the market pushed them to meet the most significant challenges. They had to prove themselves with satisfactory services to capture the attention of demanding businesses.

Challenges due to Rise in Digital Payments

Apart from the regular business competition, every company faces more challenges in various forms to address recurring problems, and it has become essential for them to move towards establishing a robust and fool-proof setup. Some of the challenges should be kept in mind are as follows:

  • Technology: The innovation of new technology entered into a new arena with better offerings like user-friendly and robust APIs, compatible and pre-built plugins with 100% system uptime, high connectivity, zero downtime, state-of-the-art security, and ultra-secure payment gateway methodology with cutting-edge safety protocols. These are the desired features for operating as the best India payment gateway and require high costs. Companies like Zaakpay are offering these services.
  • Expansion: Exponential growth of payment systems raised a demand for expansion of operations, with dedicated servers and databases, storage and network implementation with retrievable end-to-end transactional data. This is quite a task for emerging companies and cannot completely rely on a hire basis.
  • Cyber Security: Compromising security is not an option and should be adhered to with zero tolerance. The day-to-day emerging data hacking frauds and threats, online frauds, lack of knowledge in usage of digital modes by not so computer savvy customers, personal information thefts which pushed into high risk of transactions and are highly prone to fall into frauds, continuous updating of information about different kinds of breaches by fraudsters in innumerable ways, demands for a full-fledged operating of separate departments. The requirement of high skills at the operational level and an efficient secured server maintenance system is way too high to afford.
  • Competition: Heavy competition from similar service companies and being competitive in charging customers, despite offering the best features compared to competitors, and overhead costs, are crushing away the profit margins due to increased operating costs.
  • Human Resources: Increased numbers in the requirement for skilled engineers, technical staff & marketing engineers, hiring them, and training them for the required job in a short time, is quite challenging. Escalated salaries in the industry due to scarcity of people for an exceptionally skilled job gives rise to situations for hiring people on higher pay. This is a direct effect on the increase in operating costs.
  • Advertisements: Exorbitantly high advertising costs, for taking the product to customers in the competitive world, competition in advertising which became mandatory to advertise the value services offered by the company, is one of the biggest reasons for the unforeseen rise in operating costs.
  • Expectations: Expectations from customers from digital payment companies beyond what they can offer can be considered a threat to a business. Most of the population expects implementation in less than 24 hours. 24×7 support and 100% uptime of the systems being the primary requirements, digital payments companies are under a lot of stress. Zaakpay is one of the very few companies in India offering this kind of dedicated service.
  • Dispute Resolution. The stakes and losses are seen very high in the event of fraud, and in some cases, it leads to arbitration due to conflict of interests. Handling these calls with a strategic approach, sometimes by appointing outside companies, is a significant burden to handle.
  • Fast Systems, Scan Times & Network: The interconnectivity of bank accounts, computer systems, mobiles, cards, ATM, UPI payment, and other interfaces for any individual customer become an easy target for breach of information, allowing anti-social elements to attempt financial frauds. Constantly alerting customers in this regard, and making them aware of new kinds of frauds, is not an easy task. Also, making customers system savvy, reducing failures with human errors for reducing transactional failures, and making payments to wrong destinations, are known to be highly challenging. Customers are perplexed with network complexities which make interfaces complicated by reducing the response times. Also, multi-currency transactions, which call for a longer scan time in connectivity, might concern customers.
  • Payment Processing Fees: Losing the edge on being competitive to customers due to high charges from partnering banks and networks and the need for an extensive network of brands are the biggest problems payment gateways face. Sometimes these parameters play a significant role for the customer to decide on implementing a particular service or not.

From all the above inferences, it is crystal clear that, apart from the best technologies and implementation procedures, payment gateway companies should have a long-term growth plan and a unique strategy for the continuous upgrade of technologies. They should put more effort into resolving the threats by gathering resources ahead of time.