Electronic Payment for Small Business: Applications and Impact

This report examines the impact of electronic payment applications on small businesses. It analyzes the functionalities and implications of popular platforms like PayPal, Square, and Paytm, emphasizing how these technologies simplify financial transactions, especially for businesses lacking extensive manpower. The essay highlights the differences in fees and features among these applications, concluding that Paytm offers the most cost-effective solution due to its free internal transactions and minimal fees for other transactions. The analysis underscores the significance of digital payment solutions in modern business operations, enabling virtual transactions and reducing the need for physical bank visits, which saves time and resources. The report includes references to relevant research on e-commerce and digital payment systems.

Running head: ELECTRONIC PAYMENT FOR SMALL BUSINESS
Electronic Payment for Small Business
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1ELECTRONIC PAYMENT FOR SMALL BUSINESS
One of the greatest advent of the contemporary times is the growth of digital
technology. The rise in technology has not only allowed people to stay connected with
each other but has also revolutionized the sphere of business and other professional
activity. Nowadays, since people are too busy to visit a place in a physical manner,
technology aids them to visit that place in a virtual manner and complete their
activities. One of the most important activity of business is the payments related to it.
This essay seeks to analyze how the recently launched digital payment applications
supports a small business to execute its activities in an effective manner.
A business usually involves the activities of purchasing, manufacturing and
selling. For the purposes of purchasing, it needs to buy raw materials from other firms
and use these resources to manufacture its own product and services, giving it a
unique characteristic of its own. The concerned firm then sells this product to the
other consumers who are its target market. In the modern times, with the launch of
various electronic payment applications such as PayPal, the Square and Paytm, the
finances involved in the purchasing and selling of products and services have become
that much more easier, especially for a small business (Haque, 2017). This is so
because a small business does not have the required number of manpower who would
individually have the task of purchasing, manufacturing and selling all of which
involves physical transaction of money in the banks. This takes up a lot of time and
effort.
All the electronic payment applications more or less perform the same function, with
some minor variations. For instance, PayPal involves the transaction of finances
amongst people who have this application linked to their email address (Garden &

2ELECTRONIC PAYMENT FOR SMALL BUSINESS
Business, 2019). However, PayPal charges a minimum fee for every transaction made
in addition to a processing fee.
On the other hand, the application of the Square charges a minimum fee of 2.75%
as a processing fee every time a money is transferred via a credit card (Tee & Ong,
2016). This proves to be very costly for a small business as it means a loss of their
hard earned revenue.
Paytm on the other hand, allows the free transaction of money among the
customers using the same wallet. However, one of the important limitation of Paytm
is that it charges a processing fee every time an amount is send to a bank account
(Luther, 2016). However, no charge is made if the amount os transferred to the
electronic wallet.
In conclusion it can be noted that the application of Paytm is most effective for a
small business. Since most of its activities are free and no processing fees are charged,
it would not negatively impact the revenue of a small business.Thus, the various
electronic payment applications have provided relief to the small businesses by
allowing the people to send and receive money in a virtual manner for which the
physical presence in a bank is not required, saving both time and a lot of man power.

3ELECTRONIC PAYMENT FOR SMALL BUSINESS
References:
Garden, H., & Business, S. (2019). How PayPal Works. HowStuffWorks.
Haque, A. K. M. (2017). E-commerce web application using PayPal payment
gateway.
Luther, W. J. (2016). Bitcoin and the future of digital payments. The Independent
Review, 20(3), 397-404.
Tee, H. H., & Ong, H. B. (2016). Cashless payment and economic growth. Financial
Innovation, 2(1), 4.