Traditional Payments vs E payment Systems: The Right Fit for Your Business

traditional payments vs e payment systems

Known to be a highly cash-dependent economy, India has opened doors to digital payments and cashless transactions only recently. But the switch has been rather quick with more and more businesses as well as consumers preferring to transact through e-payment systems.

India is set to become a digital payment economy as the source of payments invert with 65 per cent of transactions being done digitally by 2026, as opposed to 40 per cent of transactions in 2022.

Nevertheless, businesses still rely on traditional methods for vendor payments, bills and other purchases. They may seem easier to manage but e-payments are certainly more beneficial for the business. This article talks about traditional payments vs e payment systems and the impact of their implementation on a business.

What are traditional payments?

Traditional payments are those where transactions primarily happen with the help of cash. The other instruments include cheques, demand drafts and letters of credit.

What are e payment systems?

Electronic payment systems refer to transactions done through digital processes. Some of the methods of e-payments include credit/debit cards, net banking and mobile wallets.

Traditional payments vs e payment systems

Let’s look at the main features that differentiate traditional and e payment systems

1. Security

If your business requires a significant amount of cash disbursements on a daily basis there is a potential risk of theft or even physical attacks. You need to be constantly cautious about safely storing the huge amount of cash as well as transferring from one location to another.  

Additionally, Section 269ST of the income tax allows no more than 2 lakh worth of cash transactions per day – no person can receive more than the stated amount (with defined exceptions).

Electronic payments are also vulnerable to cyber-attacks and online threats. But there is a consistent emphasis on multiple security measures to prevent fraud. Mandatory authorisations, cross-verifications and OTPs are a part of these safety measures.

Being cautious can go a long way in averting losses. Here’s a look at some of the important practices to follow for digital payments:

Avoid public networks: Transacting with the use of open wifi connections can make your account vulnerable to thefts

Do not open suspicious links: Clicking on mail links or advertisements from unknown sources can allow hackers access to your data

Don’t save/share account details: Never give your OTPs, personal details or passwords to anyone and avoid saving bank details on your phone

Take precautionary steps: Install the latest security updates, create passwords for apps and wallets, and use a remote lock/data wipe system for your mobile devices.

2. Convenience

Traditional payments can be inconvenient to manage for businesses. Because most of the trading is carried out through cash, it has to be regularly withdrawn, stored and transferred. 

Bank visits also need to be regularly done to clear cheques, renew documents and so on. This requires additional resources as well as manual maintenance of finances and accounts.

With e payment solutions, all of the above hassles are eliminated and money can be managed at any time of the hour and from any location with instant withdrawals and deposits.

Most importantly, digital payments enable speedy transfers and ensure timely availability of funds which is extremely important for any business that depends on capital reinvestment.

3. Multiple options

One of the major incentives for businesses when adopting digital payments is the flexibility they get with multiple options of payments. Your vendors or partners can transact through their preferred option and receive or send money instantly.

From credit/debit cards to mobile wallets and net banking to Buy Now Pay Later (BNPL) e payment systems simplify the process of transactions.

Traditional payments on the other hand do have cheques and demand drafts and entail several steps before the funds finally reach your bank account. 

Recommended ReadDifferent Types of E-payment Systems for Your E-commerce store

4. Ease of use

Having remained dependent on cash for a long time, most businesses might find it easier to transact through the exchange of cash. On the contrary, it can be rather complicated because you need to keep a track of all the payments, note every entry and maintain a revenue and expense report.

Online payments are easier because they can be executed even with a mobile phone and without having to note down the expenses manually. There is also a lesser possibility of receiving or transferring the wrong amount since you are notified about each transaction through a message.

5. Tracking and transparency

One of the best features of digital payments is its real-time tracking. You know about the status of every payment resulting in greater clarity and transparency in the transactions. For businesses, such access is especially helpful in planning and budgeting.

With traditional methods of payment, businesses cannot obtain clarity and have to follow up for updates on deposits. Since the process is manual, there can be unnecessary delays that hamper the smooth functioning of a business.

Traditional payments vs e payment systems

E paymentsTraditional payments
Direct transactions through internetCannot transact without human intervention
Use technology for communicationRequire humans to enable communication and processes
Have advanced security measures in placeAre risky to manage and prone to theft
Can be instantly withdrawn and deposited onlineWithdrawal and deposits take time and are done manually
Multiple options for paymentsLimited payment options
Low operational costsHigh operational costs
Easy to track transaction statusLess transparency on status and tracking
Automated payment reconciliationManual reconciliation with sizable documentation

How does a payment gateway enable e-payments

An online business requires a payment gateway to enable e-payment systems on its website or app. The payment gateway accepts online payments through several complex steps to ensure that the transactions are carried out within minutes.

Paytm Payment Gateway is preferred by startups and enterprises across the country for its unique features and advanced tech infrastructure. Here’s a look at its key benefits:

Multiple payment options: Paytm Payment Gateway supports 100+ payment sources including credit cards, debit cards, net banking, Paytm Wallet and Paytm Postpaid.

Quick integration: Paytm Payment Gateway’s onboarding process includes powerful APIs and custom SDKs to activate digital payments with minimum documentation. 

International payments: Businesses can accept payments in 100+ currencies without the need for separate API integration.

Industry best success rates: Paytm Payment Gateway has 250mn+ saved cards, 100mn+ saved bank accounts and 15mn UPI IDs that ease the checkout experience, reduce transaction time and increase success rates.


Transactions through cash have seen a steep decline in India particularly during and post pandemic. Several initiatives by the government to push digital payments have also encouraged people to adapt to online transactions. 

It is imperative for businesses to analyse the strengths and shortcomings of both the methods of payments and the impact on their output and growth. As India marches towards becoming a digital economy, businesses must explore every opportunity that helps them become a part of this transformation.


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