Internet Banking

Internet banking allows us to do banking activities over the internet using a laptop, tablet or smartphone. It works under the terms and conditions laid down by the Reserve Bank of India (RBI).

Benefits of Internet Banking:

The account holder does not require cheques and use it at the time of their convenience.

(Internet Banking done in class 6 also.)

 

Methods of Internet Banking:

  1. National Electronic Fund Transfer (NEFT)
  2. Real-Time Gross Settlement (RTGS)
  3. Immediate Payment Service (IMPS)

 

National Electronic Fund Transfer (NEFT)

National Electronic Funds Transfer (NEFT) is a nation-wide centralised payment system owned and operated by the Reserve Bank of India (RBI). The payment mode enables companies, firms, corporates and individuals to transfer funds electronically to other companies, firms, corporates and individuals within the country.

Before making an NEFT transfer, the account holder needs to register the beneficiary account details, including account holder name, account type (savings etc.), account number and IFSC code*. NEFT transactions are subject to specific time frames as laid down by the RBI and presently operate in batches of half-hourly intervals throughout the day.

Advantages of NEFT:

  1. It is available round the clock on all days of the year.
  2. Near-real-time funds transfer to the beneficiary account and settlement in a secure manner.
  3. Pan-India coverage through an extensive network of branches of all types of Banks.
  4. The sender receives confirmation via SMS /e-mail on credit to the receiver’s account.

*IFSC stands for Indian Financial System Code. It is an 11-digit alphanumeric code that is unique to a particular branch of a particular bank.

 

Real-Time Gross Settlement (RTGS)

RTGS is a real-time settlement system which allows for fast processing of money transfer between any two accounts. ‘Real Time’ means the processing of instructions at the time they are received; ‘Gross Settlement’ means that the settlement of funds transfer instructions occurs individually. The payments made via RTGS are final and irrevocable.

The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is ₹ 2,00,000/- with no upper limit.

Advantages of RTGS:

  1. Safe and secure system for funds transfer.
  2. No cap on the maximum amount being transferred.
  3. Available on all days on a 24x7x365
  4. Real-time transfer of funds to the beneficiary account,

 

Immediate Payment Service (IMPS)

IMPS is a product made available by the Reserve Bank of India (RBI) and National Payments Corporation of India (NPCI). It allows for 24x7 instant funds transfer service that can be accessed on multiple channels like Mobile, Internet, ATM and SMS.

The key feature of IMPS is that it is available at all times. The transaction fee for IMPS is nominal, and it allows a transfer limit of Rupees 2 lakhs per transaction.

Advantages of IMPS:

  1. Fast, safe and secure way to send and receive funds.
  2. Works on both net-banking and mobile platforms and its services are available at all times, including holidays.
  3. Funds can be transferred simply by providing the mobile no. and Mobile Money identifier (MMID). Bank account numbers are not necessary.
  4. Transfer confirmation is sent by the bank to both the payer and the payee when the transfer is complete.
  • Fund transfer limit currently is Rupees 2 lakh per transaction. The minimum allowed transaction value in IMPS is Rupee 1

 

Mobile Banking ‒ Bank in Pocket

Most of the banks provide the facility of Mobile Banking in the form of an app that provides the following key services:

  1. Checking of the account balance
  2. Making funds transfer
  3. Bill payments and card payments
  4. Service requests such as ordering cheque books

Advantages of Mobile Banking

  1. 24x7x365 access to banking services
  2. Saves time as well as money by avoiding physical visits
  3. Better control over account and finances
  4. Reduces paperwork by virtue of digital technology

Do’s and Don’ts while Using Mobile Banking

  1. Use only the bank authorised mobile banking app.
  2. Keep a strong password/PIN number.
  3. Do not share the PIN number or OTP with anyone.
  4. Keep your mobile free from malware.
  5. Do not install apps from non-secure sources.

 

Unified Payments Interface (UPI)

UPI is a system developed by the National Payments Corporation of India (NPCI). UPI ID is simply a payment address, using which you can send or receive money using any UPI App. A UPI ID is unique to a user just like your email address (example: abcd@upi)

Key Features of UPI

  1. Make easy, safe and instant transactions.
  2. Access multiple bank accounts from a single mobile application.
  3. Send and receive money seamlessly across UPI apps.
  4. Make direct bank payments using UPI ID or UPI QR.
  5. Use your UPI ID to send or receive money across 200 banks, 21 third-party and BHIM Apps.
  6. Single click authentication using UPI PIN.
  7. Make payments for daily expenses, e-commerce, bill payments and more.

 

Bharat Interface for Money (BHIM)

BHIM, is a digital app that helps us make simple, easy and quick payments with Unified Payments Interface (UPI).

Key Features of BHIM:

  1. Send money
  2. Request money
  3. Scan QR code and pay
  4. Bill payments
  5. UPI AutoPay
  6. Biometric Authentication
  7. Supports 20 languages
  8. Balance Enquiry

Steps for First Time BHIM User

  1. Download and install BHIM app from the Google Play Store/Apple App Store, as the case may be.
  2. Select your preferred language from the list.
  3. Read the message for access which the app would require and click on Proceed
  4. Allow access for necessary services to the app.
  5. Select the SIM card which has the mobile number registered with your respective bank you wish to link with BHIM.
  6. Set the application passcode required to use the app.
  7. Link your bank account using the bank account option.
  8. Set your UPI PIN by providing the last six digits of your debit card and the expiry date of the debit card.
  9. Click on Send option from the home screen of the app and enter the UPI ID. Select from your contact list or by entering the Account/IFSC code. You can also scan the QR of the person to whom you want to send money.
  10. Enter the details for Amount, Account to Debit and click on Send
  11. Enter the UPI Pin you set earlier to authenticate the transaction

Precaution: Do not share your OTP, debit card details and UPI pin number with anyone.

 

QR Codes

Quick Response (QR) code is a type of barcode*. The UPI interface makes it extremely easy and convenient to make payments using the QR codes.

How Barcode works:

  1. The customer scans the QR code placed at merchant locations or generated on PoS.
  2. Customer checks the transaction details like amount, merchant name, etc. and confirms.
  3. The customer then enters the UPI PIN.
  4. Success confirmation is received on the app along with SMS on mobile.

*A barcode is an optical label for physical goods and items that a barcode reader can only read.

 

Mobile Wallets

A mobile wallet is a virtual wallet in the form of a mobile app that allows you to make purchases simply by scanning the QR code at the merchant establishment. A popular example of a mobile wallet in use today is Google Pay.

Key benefits of using mobile wallets

  1. Make payments using mobile, without carrying cash or cards.
  2. Make utility bill payments conveniently.
  3. Transactions are fast, and sender and receiver receive confirmation instantly.
  4. Secure platforms based on authenticated users.

 

Unstructured Supplementary Service Data (USSD)

The USSD service is available in 12 languages, making this service accessible to maximum population sections.

Essential services offered through USSD-based banking include:

  1. Checking account balance
  2. Generating account statements
  3. Making funds transfers

 

Other Modes of Payments

 

National Automated Clearing House (NACH)

The National Payments Corporation of India (NPCI) offers to banks, financial institutions, Corporates and, Government(s) a service termed as “National Automated Clearing House (NACH)” which includes both Debit and Credit.

NACH (Debit) and NACH (Credit) aims at facilitating interbank high volume, debit/ credit transactions, which are repetitive in nature, electronically using the NPCI service. In the case of NACH, an account holder is able to set up instructions of a specific amount transfer to occur at regular intervals, say every month.

It is used for making bulk transactions towards the distribution of subsidies, dividends, interest, salary, pension etc. and also for bulk transactions towards the collection of payments pertaining to telephone, electricity, water, loans, investments in mutual funds, insurance premium etc.

NACH is of three types:

  1. NACH Debit: A specific amount is deducted and transferred to the beneficiary’s account each month according to instructions e.g. loan payments, mutual fund investments etc.
  2. NACH Credit: A specific amount is received and credited on a regular basis e.g. Monthly salary paid to an employee.
  3. Aadhaar Payments Bridge System (APBS): APBS caters to making payments on the basis of Aadhaar number of the customers. The Aadhaar number becomes the financial address of the customer and facilitates the movement of the customers from one bank to another if they desire so. The APBS also sub-serves the goal of Financial Inclusion and facilitates the Government to transfer subsidies directly to the people through their bank accounts.

Advantages of NACH:

  1. Improves customer relations by creating a regular framework of payments.
  2. Reduces paper use by online transactions.
  3. Reduces the risk of delayed payments due to fixed schedule.
  4. Helps in the payment of insurance premium, loan instalments, credit card payments, mutual funds etc.
  5. Distribution of government subsidies to the beneficiary account becomes easy.

 

Bharat Bill Payment System (BBPS)

Under the guidance of RBI, NPCI created one-stop solution for payment of all recurring bills anytime, anywhere. BBPS was launched in the year 2017, wherein consumer could pay all his/her recurring payments at one-place via any of their preferred banking app, payment app or nearby agent/kirana shop.

 

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Security and Modes of Digital Payments 6