On 8th of November, 2016, our Prime Minister, Mr. Narendra Modi in a televised address to the nation announced that Rs. 500 and 1000 notes will cease to be legal tender from midnight, in layman’s term ceasing to be legal tender simply means the notes will become invalid as a mode of payment in most places.
The government with this move was replacing 86 percent of India’s cash in circulation ( by value), an unprecedented move not only for India but everywhere, more so when one considers the fact that 94 percent of all transactions in India are done by cash. As was expected and probably also anticipated by the government, this demonetization move resulted in a massive rush by people to find effective alternatives for sustenance until things got back to normal.
One of the hardest hit were businesses, almost all of them, whether it be the local kirana store, small and medium manufacturing facilities, service industries, leading MNC’s etc. As a matter of fact, none of the problems suffered would actually have happened if cashless transactions were an accepted mode of payment at most business outlets. So to combat with such troubles in future, businesses should go cashless.
Listed below are some ways on how to do it.
Simply put, a POS or point of sale machine is an electronic device that can process card payments. To process a transaction, all that is required is a credit or debit card and the requisite authentication code( PIN code)
How to avail – Typically a POS machine costs around 3000 rs and can be easily integrated with a banking terminal of choice. Another option is availing of dedicated services offered by banks, a notable example being SBI’s merchant acquiring services, wherein SBI itself installs POS machines at outlets of businesses that have availed the service.
For people who consider swiping their cards at random places too risk prone, there is a better option of using E-wallets such as Paytm, SBI buddy, Freecharge, Phone pay, payUmoney, Mobikwik and many more. E- wallets generally work by enabling an account user to send or receive money to and from another account user through identification codes ( which are almost always the phone number of people using E-wallets).
How to avail – Install the app of the E-wallet you want to use, transfer money into it through your debit card, credit card or net banking. Afterwards, for making payment to someone, click on the pay icon, enter the customer ID of the receiver ( as mentioned above, its almost always his/her phone no. ), enter the amount and click send. Transaction complete, its that simple.
Online bank transfer
A simple process through which one can log into his/her bank account, add the beneficiary and afterwards transfer money. From relatives, friends to business associates, this mode of transaction is already being used by a lot of people in India.
How to avail – One can log into his/her account using a user id and password, nowadays most banks provide the option of using internet banking right from the day the account was made operational. After logging in, add the beneficiary’s account number, exact name, branch name and IFSC code. Afterwards the money can be transferred in three ways, NEFT, RTGS and IMPS.
Unified payment interface ( UPI)
A new technology that has recently been adopted by banks, this service allows you to send money to anyone online without entering his/her account number, IFSC code etc. Instead the only thing required is the receiver’s mobile number which is integrated with his/her bank account.
How to avail – Most major banks are already offering UPI services. All one needs to do is to download and install the UPI app of the bank in which his/her account is functional, enter the required information and start making payments or receiving them in an instant.
BOE – Bill of exchange ( cheques, drafts etc.)
Everyone would be aware of cheques and drafts and how they work. For all the advancements in technology, these are still considered by many to be the safest mode of payment when it comes to high value transactions. Having been used in India since many decades now, the recent upheaval is only expected to increase their usage.
How to avail – Cheques are issued by the bank along with the other documents during the time of opening of an account. As for drafts, it can be issued by any bank branch after filling out certain information and making a payment equal to the amount the draft is to be made of.
Develop an online store that is able to accept online payments
Over the past few years e-commerce firms such as Flipkart, Snapdeal, Amazon etc. have made great strides in market penetration, with a majority of products that were once the preserve of brick and mortar stores being sold and bought online. This model can be replicated by countless businesses across India.
Business owners need to realize that having an e commerce version of their business doesn’t cost too much, contrary to what they have always thought. The e -commerce site is integrated with a payment gateway. This would help firms to expand their customer base, increasing awareness about their products while also making transactions more secure.
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