Digital Payments

Parties Involved.

• Card: The entities involved in the end-to-end processing of a digital payment transaction include the merchant (payee), the consumer (payer), the bank, and the payment network. ‘Merchant’, in this context, refers to local Kirana stores, shopping malls, retail outlets, as well as e-commerce portals and service providers that provide the facility to transact or settle dues using digital payments.
• Central Bank Digital Currencies (CBDCs): Central bank digital currencies (CBDCs) are currencies issued by the central bank of a country. They are separate from fiat currencies, which are also backed by the authority and credit of a central bank, and are another obligation of the institution. CBDCs ease monetary policy implementation by removing intermediaries from the policy by establishing a direct connection between the government and the average citizen. Banks and financial institutions responsible for distributing national currency are no longer required in the process.
• Cryptocurrencies: Cryptocurrencies are digital currencies designed using cryptography. The crypto wrapper around a digital currency provides enhanced security and makes transactions tamper-resistant. The most popular cryptocurrencies are Bitcoin and Ethereum. Since 2017, the popularity of cryptocurrencies as an investment class has skyrocketed their value and the overall market capitalization of crypto markets. By July 2021, the market cap of cryptocurrencies had surpassed $2 trillion.