3.5 Banking in Digital Era

 

Why do we like instant noodles or any form of fast food? Because they’re quick and easy to prepare. Isn’t it?  Similarly, there are quicker and easier transactional modes in banking than those elaborated on in the last chapter. Let’s take a look at digital transactional banking products. 

Digital payments are those payments in which the payer and the payee both use electronic modes to send and receive money. Some of the examples of digital payments are Mobile banking, Internet banking, Micro ATM, Mobile wallets, Aadhaar enabled payment system, UPI.

 

                                Various digital banking products 

1.Internet Banking

It allows the customer to perform banking activities through the bank’s website/ application. It is also called e-banking, virtual banking, or online banking.

Some of the types of transactions done through internet banking are-

a. National Electronic Funds Transfer (NEFT)

NEFT is a payment system hosted by the RBI and available throughout the country. The system uses Indian Financial System Code (IFSC) to identify the participating banks and allows customers to perform bank transfers through physical forms or online modes like internet banking. The transactions are executed in forty-eight half-hourly batches throughout the day. In other words, the money you sent from your account will reach your friend’s account within half an hour.

 Maximum Limit- No limit, Minimum limit- No limit

b. Real-Time Gross Settlement (RTGS)

RTGS is also a funds transfer system primarily intended for large value transactions. Unlike NEFT, in RTGS, the trades are settled immediately. So, there is no delay in the money transfer.

Maximum Limit- No limit, Minimum limit- 2lakhs

c. Immediate Payment Service (IMPS)

IMPS is an instant electronic bank transfer system operated by the National Payments Corporation of India (NPCI) that uses the combination of account number and IFSC or Mobile Money Identifier (MMID) to transfer money in real-time. 

Maximum Limit-2lakhs, Minimum limit- NIL

2.Mobile Banking

An act of making payment remotely through your mobile devices like phone, tablet etc.

The advantages to mobile banking include the ability to bank anywhere and at any time. Disadvantages have security concerns and a limited range of capabilities compared to banking in person or on a computer.

3.Mobile Wallet

It is a virtual wallet that stores individual payment card information on a mobile device.  An Individual’s account is required to be linked to the digital wallet to load money in it. Most banks have their e-wallets and some private companies. e.g., Paytm, Freecharge, Phonepe, Mobikwik, Oxigen, Airtel Money, etc.

4.Micro ATMs Micro ATM meant to be a device that is used by the Business Correspondents (BC) to deliver essential banking services. The platform will enable Business

Correspondents (who could be a local retail shop owner and will act as micro ATM‘) to conduct instant transactions.

5.Aadhaar enabled payment system (AEPS)

 Aadhaar Enabled Payment System is a payment service empowering a bank customer to use Aadhaar as his/her identity to access his bank account and perform basic banking transactions like balance inquiry, cash deposit, cash withdrawal, remittances through a Business Correspondent.

 

 

                                 Customer services provided in AEPS

6.Unified Payment Interface (UPI)

Unified Payments Interface is a real time payment system that allows sending or requesting money from one bank account to another. Multiple bank accounts may be linked to single UPI client app. It is one of the quickest and most convenient mode of payment currently available. Money can be sent or requested with the following methods:

  • Virtual Payment Address (VPA) or UPI ID: Send or request money from/to bank account mapped using VPA.
  • Mobile number: Send or request money from/to the bank account mapped using a mobile number.
  • Account number & IFSC: Send money to the bank account.
  • Aadhaar: Send money to the bank account mapped using the Aadhaar number.
  • QR code: Send money by QR code with enclosed VPA, Account number, and IFSC or Mobile number.

One can use A UPI app to make or receive an amount. The service is available 24 *7 with no minimum or maximum limit. Some of the available apps are Google pay, BHIM UPI, Paytm, cred, Phonepe, etc

                       Process of making transaction through UPI accounts 

THINK ABOUT IT!

How many UPI Apps have you used so far? 

Your grandparents might be able to tell you stories of going to bank branches for every banking need. But those are stories of the past. Currently, banking is at your fingertips. With most of the banking services available on your mobile phone and through the internet, the need to physically go to a branch disappears. Some banks operate on a completely digital model where all the processes, from account opening to performing transactions, are online. Today, essential banking needs are serviced round the clock, and you can access them from anywhere!

Digital India scheme- 

Digital India is a Government of India initiative aiming at improving the online infrastructure and enhancing internet connectivity. The motto of Digital India is “Power to Empower.”

Digital Infrastructure Creation, Digital Delivery of Services, and Digital Literacy are the three main components of the Digital India initiative. The key objective is providing high-speed internet in every part of the country and improvising the online infrastructure.

The crucial initiatives under Digital India include:

DigiLockers, E-Health Campaigns, E-Education Campaigns, E-Kranti (Electronic Delivery of Services), BHIM – UPI Portal, E-Hospitals