Essay on the Advantages and Disadvantages of Digital Payment

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Since the inception of time, commerce, business, and trading have been prevalent in this world. Be it the Indus Valley Civilization or the modern digital era, there have always been parties in the fields of business commerce and arts. In every typical business model, there is a party that buys something and another party that pays something equivalent to the worth of the utility he or she is purchasing. Now, the payment methodology of such transactions evolved as the trade industry grew. Initially, a barter system was introduced where the purchaser or buyer could buy something by exchanging something, which is useful for the seller. For example, if I wanted a rice bag of 1kg, I would have to request the seller to sell me the bag, and in exchange ask for a deal of what needed to be exchanged against the rice bag. It could be 1kg of wheat flour or even a kilogram of gold. Therefore, visibly, there was no definite measure of exchange of value, and moreover, I would have to sacrifice something to gain something, the same stands for the seller as well. Moreover, their system of deferred payment would be impossible in such Transactions, nevertheless, the storing value of such goods also stands as a burden. Then came the concept of metal money issued by an authority, usually issued by the kings or barons of land. Soon as time elapsed, metal money was slowly replaced by coinage metals, which certain coins stood for as the value of money, shinier and weight the coin had, much larger was the value it carried. As soon as the political and legislative structure started to adapt in this world, soon humans invented the concept of paper money, where paper represented had no value, but were issued by the government and legalized authorities, such as the central banks. Soon plastic money came into existence. That is, cheques, payment orders, etc., such payment methods were known as the traditional forms of payment. In the 1990s, technology was blooming and the world was going digital. Computers came into existence and the world soon turned into a global village through this digitalization. With this technological advancement, the concept of electric fund transfer and e-payments came into the picture. The modern emerging form of payment is the e-form of payment.

E-form of payment or e-payment is a payment that is done through electronic or digital mode. In short, it enhances the acceptance of electronic payment for online transactions. In every transaction, there is a payer and a payee (buyer and seller). In such payment modes, the account of the payer is debited, and the account of the payee is credited at the time of the transaction. A credit card is an example of this mode of payment. Such systems have been increasingly relevant in recent times.

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Advantages of E-Payment Systems

  1. Low labor cost. Such digital or e-payments are automatic and hence need no manpower or much labor for which the labor cost for such is usually low. This helps in higher profit expectancy and huge growth opportunities for any producer.
  2. Fast. Unlike the earlier days when one had to stand in a line/queue or wait for hours at the table or cashing counter in order to perform a transaction, here, the transaction is only a few clicks away. Fast transactions help in increasing revenue at a growing rate and provide an opportunity for the producer or company to increase its customer base.
  3. Automatic. Such payments are automatic, which is usually convenient for the customers as well as users. Such payments take place through banks with no bank employee involved in order to initiate the transaction. This ensures a safe and fast transaction.
  4. Feedback. E-payments usually have a quick mode of feedback from their customers. When feedback is quick, problems can be identified easily. Hence, they help the management to prepare a response plan much more quickly and efficiently.
  5. Increased sales. As e-payments become widespread, the number of people using cash sales reduces, and hence by such a bank rate e-payments enable quick sales to customers who prefer to pay electronically, and hence gain a competitive advantage over those using traditional payment methods.
  6. Record of transactions. Each and every transaction is recorded, and hence by such mode of payments the accounts of a firm or a company are easy by use of various software and this helps in clear transactions and accountability in the books of accounts of a company or a firm.
  7. Enhances digitality. E-payments enhance and entice consumers and customers to shift to digital modes of payment. Hence, it helps in the digitalization of the economy.

Disadvantages of Digital Payment

  1. Security. E-payments are prone to cybercriminals who disable online payments and exploit them to steal such people’s money. That is, when someone uses credit card credentials to perform a transaction without the authorization of the credit card owner, such transactions are deemed to be genuine and lead to cyber fraud and siphoning of funds. Other than cyber fraud, the data transfer which takes place during a transaction is a concern. As personal data may be often stored in databases of such systems, hence there is a lack of anonymity.
  2. Technical problems. Technical glitches and technical errors usually slow down e-payments, resulting in disputed transactions. In such cases, it is difficult to claim a refund.
  3. Dependability. To perform digital payments or e-payments one has to be acquainted with digital technology. Those who do not know much about digital technologies often find it difficult and have less trust in such modes of payment. Hence, the element of dependability on technology is a backdrop to such a mode of payment. In short, with no Internet access, such payments cannot be performed.
  4. High maintenance costs. It is evident that the world is growing at a fast pace. 20 years back no one would have considered e-payment as a mode of transaction, and a few more years back, no one knew that bitcoins and cryptocurrency would be prevalent in the present modern era. Maintenance cost is the cost of constantly updating to new faster and quick technology. When one engages in an e-payment mode of payment, the cost of maintenance becomes inevitable.


Concluding on a lighter note, e-payments provide a great opportunity for fast transactions and have many pros with a little number of concerning drawbacks. E-payments prove to be an effective mode of payment. But it is also to be noted that, according to various studies, the rate of criminal fraud in cyber payments increases by 30% every year. Therefore, one must be cautious and attentive while making such payments. Also, one must be acquainted with various important secured ways to pay via e-payments in the market.

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Essay on the Advantages and Disadvantages of Digital Payment. (2023, November 21). Edubirdie. Retrieved July 14, 2024, from
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