DIGITAL FINANCIAL TOOLS

Indian government launched digital India Campaign to reduce dependency of Indian economy on cash and prevent from money laundering. In making cashless India and increasing trends in using digital payment system various Payment methods have emerged and developed to replace traditional payment methods like Cheques, withdrawals, drafts, money orders, letters of credits, travel cheques etc. Digital Payment system is easy to use to the customer as well as bank officers and there are several options that are available in the financial system of India which are discussed in subsequent sections. 

 Unified Payment Interface (UPI)

UPI is a Unified Payments Interface system that allows multiple bank accounts into a single mobile application, merging several banking features. It is used to transfer money receive money, bill payments and others. Over the years it has gained immense popularity in India. It is interesting and easy to use and not need to remember frequently use beneficiary's account number, etc.

Features

1. Immediate money transfer through mobile device round the clock 24 x 7 and 365 days. 2. Single mobile application for accessing different bank accounts.

3. Single Click 2 Factor Authentication-Aligned with the Regulatory guidelines, yet provides for a very strong feature of seamless single click payment.

4. Virtual address of the customer for Pull & Push provides for incremental security with the customer not required to enter the details such as Card no, Account number; IFSC etc. 5. Payment through QR code scanning.

6. Best answer to Cash on Delivery hassle, running to an ATM or rendering exact amount. 7. Merchant Payment with Single Application or In-App Payments.

8. Utility Bill Payments, Over the Counter Payments, QR Code (Scan and Pay) based payments.

9. Donations, Collections, Disbursements Scalable.

10. Raising Complaint from Mobile App directly.

Aadhaar Enabled Payment System (AEPS)

AEPS is a bank led model which allows online interoperable financial transaction at POS (Point of Sale or Micro ATM) through the Business Correspondent or Bank Mitra of any bank using the Aadhar authentication. It empowers a bank customer to use Aadhaar as his/her identity to access his/ her respective Aadhaar enabled bank account and perform basic banking transactions like cash deposit, cash withdrawal, Intrabank or interbank fund transfer, balance enquiry and obtain a mini statement through a Business Correspondent. AEPS facilitates disbursements of Government entitlements like NREGA, Social Security pension, Handicapped Old Age Pension etc. of any Central or State Government bodies, using Aadhaar and authentication thereof as supported by UIDAI.

Services offered by AEPS

(a) Cash Deposit

(b) Cash Withdrawal

(c) Balance Enquiry

(d) Mini Statement

(e) Aadhaar to Aadhaar Fund Transfer

(f) Authentication

(g) BHIM Aadhaar Pay

(h) eKYC

(i) Aadhaar Seeding Status.

 USSD

The innovative payment service (*99#) works on Unstructured Supplementary Service Data (USSD) channel. This service allows users to use mobile banking without internet. *99# facility is available to make money transfer from one person to another without using internet and smart phones. *99# service has been launched to take the banking services to every common man across the country. Banking customers can avail this service by dialing *99# on their mobile phone and transact through an interactive menu displayed on the mobile screen. Using this customer can check balance, transfer money, can get mini statement, change UPI pin, etc.

Features of *99# Service :

(a) Uses USSD as the access channel that works across all GSM handsets (smartphone or otherwise) making it reach the last mile user.

(b) Supports menu-based applications that is easy to surf for the users

(c) Does not require data connectivity that makes it high availability service

(d) Round the clock availability (works even on holidays).

(e) Accessible through a common code *99# across specific GSM Operators and mobile handsets. Additional channel for using BHIM app and key catalyst for financial inclusion.

Credit & Debit cards

Banking sector provides various cards like debit and credit cards to avoid the time spend over the banking transaction. It offers consumers more security, convenience, and control than any other payment method. Payment cards give people the power to purchase items in stores, on the Internet, through mail-order catalogues and over the telephone. They save both customers and merchants' time and money, and thus enable them for ease of transaction.

Debit cards are issued by banks and are linked to a bank account. Credit cards are generally issued by banks and a couple of non-banks, but can also be issued by other approved entities. Credit cards and debit cards typically look almost identical, with 16-digit card numbers (mostly), expiration dates, cvv, magnetic strips, and EMV chips. Both can make it easy and convenient to make purchases in stores or online, with one key difference. Debit cards allow you to spend money by drawing on funds you have deposited at the bank in your account. Credit cards allow you to borrow money from the card issuer up to a certain limit as set by the issuer to purchase items or withdraw cash. 

Services Offered:

1. These cards can be used at POS (Point of Sale) machines, ATMs, micro ATMs, Shops, wallets, online transactions, and for e-commerce websites.

2. International cards can be used across globe for multiple currencies.



 e-Wallet

E-wallet stands for electronic wallet. These are also called mobile wallets or digital wallets. There are several e-wallets that are available and each bank has their own application. The customer can carry digital cash trough e-wallet. By use of wallet customer can link credit card or debit card or even UPI id in mobile device to make transaction. An individual's account is required to be linked to the digital wallet to add the money. The Paytm, Free charge, Mobikwik, Airtel Money, Jio Money, SBI Buddy, Phonepe, Gpay, Amazon Pay, ICICI Pockets, etc. are few of the mobile wallets used in India. The utility of e-wallet is same as a credit or debit card. The main objective of e-Wallet is to make paperless money transaction easier.

Features

(i) Type of prepaid account in which user can store money for future transactions.

(ii) Protected with passwords, pin and/or OTP.

(iii) Users can make payment for e-commerce, travel bookings, purchasing grocery, etc.

(iv) Payment can be made by scanning QR codes etc.

Internet Banking

Internet banking, also known as online banking, e-banking or virtual banking, is an electronic payment system that allows customers of a bank to make transaction using website of the bank by entering USERID and password. Internet banking offers customers almost every service traditionally available through a local branch including loans, transfers, and online bill payments. With online banking, consumers aren't required to visit a bank branch to complete most of their basic banking transactions. They can do all of this at their own convenience, wherever they want i.e. at home, at work, or on the way to our work. Banking transactions offered online vary by the institution. Most banks generally offer basic services such as transfers and bill payments. Some banks also allow customers to open up new accounts and apply for credit cards through online banking portals.

Features

(i) The customer can view his/her account details anytime, anywhere

(ii) The customer can check the history of the transactions for a given period by the concerned bank.

(iii) Bank statements, various types of forms, applications can be downloaded.

(iv) The customer can transfer funds, pay any kind of bill, recharge mobiles, DTH connections, etc.

(v) The customer can do transactions on e-commerce platforms.

Advantages

(a) Convenient banking anywhere, anytime

(b) Fast and Efficient Fund Transfer

(c) Accounts can be monitored regularly

(d) Online bill payments facility

(e) Debit/Credit card application facility

(f) Loan application facility.

Disadvantages

(a) Technology issue to less techno friendly person

(b) Security issues due to increasing cyber crime

(c) Doesn't work without internet

(d) No relation with the personal banker (e) Cash deposits not possible

(f) Server down and server update problems.

National Electronic Fund Transfer (NEFT)

NEFT is an electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems, without the direct intervention of bank staff. National Electronic Funds Transfer is a nationwide payment system which provides funds transfer from any bank any branch to any bank. Not only account holders but also without having account people can sent money to others account by depositing money from anywhere. It is owned and controlled by the RBI.

At present, NEFT settlement system operates in hourly batches. Hence, there are 12 settlements starting from 8 am and extending to 7 pm on week days (Monday through Friday) and 6 settlements starting from 8 am to 1 pm on Saturdays. Other than personal funds transfer, the NEFT system can also be used for other transactions like payment of credit card dues to the issuing bank, payment of loan EMI, etc.

Benefits

(a) It provides an easy, cheaper and faster method of transferring money.

(b) It helps individuals and organizations to save on costs such as printing cheques as well as the time to deliver or collect cheques and deposit them in the banks for processing.

(c) The money moves to the recipient's account much faster since there is no manual moving of cheques from one bank to the other.

(d) It is more efficient, has less administrative procedures, hence reduced labour and staff costs 

(e) It is much safer and secure. For instance, it eliminates the need to carry huge amounts of money.

Real Time Gross Settlement (RTGS)

RTGS is settlement of funds transfers individually on an order by order basis. 'Real Time' means the processing of instructions at the time they are received rather than at some later time. Considering that the funds settlement takes place in the books of the Reserve Bank of India, the payments are final and irrevocable. For transferring large amount RTGS is used. Customers can send minimum 2 lakh. and maximum have no limit. RTGS can be used in banking hours.

The RTGS payment system is maintained by the Reserve Bank of India (RBI) and hence is a safe and reliable method of sending and receiving money at any given point of time in the country. In fact, RTGS is one among the fastest ways to send money to anyone. It is much faster than the NEFT method of payment.



Modes of RTGS

(a) Internet banking: Many banks offer the facility to add beneficiary online using the internet banking facility. Upon successfully adding beneficiaries, you can transfer funds to the beneficiary. In addition to individuals, corporate account holders can also utilise internet banking to make RTGS transfers.

(b) Branch: Visit the nearest bank branch and fill the RTGS form to initiate a fund transfer. 

Features

1. Real-time online fund transfer

2. Used for high value transactions

3. Safe and secure

4. Reliable and backed by RBI

5. Immediate clearing

6. Funds credited on a one-on-one basis

7. Transactions executed on an individual and gross basis

Immediate Payment Service (IMPS)

IMPS provides robust & real time fund transfer which offers an instant, 24X7, interbank electronic fund transfer service that could be accessed on multiple channels like Mobile, Internet, ATM, SMS. IMPS is an emphatic service which allow transferring of funds instantly within banks across India which is not only safe but also economical. This facility is provided by NPCI.

Objectives

1. To enable bank customers to use mobile instruments as a channel for accessing their banks accounts and remit funds.

2. Making payment simpler just with the mobile number of the beneficiary.

3. To sub-serve the goal of Reserve Bank of India (RBI) in electronification of retail

4. To facilitate mobile payment systems, inter-operable across banks and mobile operators in a payments. safe and secured manner.

5. To build the foundation for a full range of mobile based Banking services.

Online Bill Payments

Online bill payment is a facility provided to the customer to make their utility payments online through digital banking systems discussed above. The customer has different utility payments like Electricity Bill payment, Mobile bill payments, Water bill payments, insurance payments, credit card bill payment, etc. Mobile Application availability has eased the mode of paying these bills through Online Bill Payment.

The customer initiates the payment for a specific vendor who is already maintained in the system by the user. The customer provides below details while initiating the payment:



1. Selects the payee (vendor)

2. Amount

3. Account number to debit the funds

4. Note: narrative optional field

On submitting the request a reference number is generated by application indicating successful initiation of the payment.

Bharat Bill Payment System (BBPS): Bharat Bill Payment System (BBPS) is a Reserve Bank of India (RBI) conceptualized system driven by National Payments Corporation of India (NPCI) that offers interoperable and accessible bill payment service to consumers via digital (bank channels) as well as through a network of agents & bank branches. Bharat BillPay offers all recurring payments like electricity, telecom, DTH, Gas, water bills, Insurance, Loan repayments, Education fees, FasTag Recharge, Municipal taxes, Housing society, Subscription fees etc. at one single window. The biggest advantage is that the consumer has the "Control" of all his bills at one place and can be paid anywhere and anytime. A transaction can be done on any customer facing channel be it electronic (like Internet, Mobile, Kiosk ATMs etc.) or physical outlets like branches, retail across the country via Cash, Card, IMPS etc.

Point of Sale (POS)

A POS or point of sale is a device that is used to process transactions by retail customers. It allows to PoS holder to collect money from their customer by the way of swap/dip of cards also with no need to go bank for making transaction of purchase and selling. A POS may be a physical device in a brick-and-mortar store or a checkout point in a web-based store. A POS transaction may occur in person or online, with receipts generated either in print or electronically. Cloud-based POS systems are becoming increasingly popular among merchants.

Working

(i) A customer chooses to buy your product

(ii) POS system calculates the total price and modifies inventory

(iii) Customer pays

(iv) The point-of-sale transaction is finalized.

Hardware Required:

(i) POS terminal. A POS terminal is the device that your POS software runs on. Mobile POS software can be installed onto any tablet, smartphone, desktop, or laptop computer with an internet connection.

(ii) Cash drawer. Unless you only process cashless payments, you'll need somewhere to put the cash customers use to pay for your products. Cash drawers are a safe, secure place to organize bills.

(iii) Bar code scanner. A bar code scanner reads an item's product details. They're also useful for double-checking a product's price, the amount of inventory you have in stock, and other details.

(iv) Credit and debit card reader. This piece of hardware can read debit and credit cards. There are several ways to read a card, including swipe, tap, and EMV chip. You need this for payment processing so you can receive the funds from the customer's bank.

(v) Receipt printer. While receipt printers aren't always essential, they're useful if you want to offer customers the option of taking a printed receipt rather than an email receipt. 

Benefits

(i) Centralizing your inventory management

(ii) Collecting and visualizing sales data in real time

(iii) Building in-depth customer profiles

(iv) Accepting payments anywhere

(v) Improving in-store sales

(vii) Opening new stores faster

(viii) Adapting to changing business needs.