Sunday, 13 November 2016

5 Types of Online Payment and Settlement Systems in India


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For our day-to-day purchases, we prefer to pay by cash because it’s secure and convenient. But, what if we need to send money to a loved one instantly who is living far from us or need to buy something but have not enough cash? Similarly, what if you’re at a place where your currency notes are not accepted or you spent all of your money extravagantly on a trip. A quite different scenario can also arise where your nation may announce demonetization of current currency notes, which currently happened in India (Indian government has announced the abolition of Rs. 1000 and 500 notes to deal with counterfeit notes menace), but you need money to fulfill your daily requirements.
If you mess up with any of the above scenarios or in other then don’t panic! There are a number of alternative non-cash payment methods available to get some buying done without paying in cash. In this tutorial, we have come up with five different payment methods to complete your purchases. Read on to know different methods of payments available to pay for your purchases without paying in cash.
Online payment modes

5 Different Types of Non-Cash Payment Methods

1. Pay by Cheque

Yes, I know it is not a digital payment option but this is the second (assuming cash first) easiest or preferable payment method used by most people in India. In cheque payment, you give a signed leaf of cheque from your cheque book to someone like seller, lender or the like, and he/she receives cash from his/her bank after depositing it. Therefore, if you carry your cheque book then you can pay the amount through a cheque; if seller or beneficiary accepts.

2. Electronic Fund Transfer (EFT)

This is a trending payment method and almost all banks offer EFT facility to their customers. Usually, in EFT, we use digital banking solutions like internet banking, mobile banking, or SMS banking, to transfer funds from one account to another. It is a reliable and secure payment method and a large percentage of people and organizations use it. Electronic Fund Transfer has three basic types: NEFT, RTGS, and IMPS, depending upon the amount of transfer and medium of transfer.

Transfer Funds Using NEFT, RGTS, or IMPS

(a) Immediate Payment Service (IMPS):

It is a quick real time money transfer mode to send/receive money from one account to another. In IMPS, remitter transfers funds from his/her bank account to the beneficiary’s using mobile device, internet banking, or ATM machine. This service can be availed anytime and anywhere. IMPS allows you transfer up to Rs. 50,000 excluding initial period of activation.
Features of IMPS:
  • Anyone can use IMPS facility; if his/her bank provides.
  • This service is available 24*7 including holidays and weekends. 
  • No charges to be levied from beneficiaries. 
  • You can transfer up to Rs. 50,000 per day.
  • It is a real-time electronic payment method; which means receiver gets money within a few minutes or instantly. 
Requirements to send money through IMPS
You need to activate mobile banking service of your concerned bank on your account. To do so you can visit your bank branch, online banking, or visit nearest ATM and perform following steps:
  • Swipe your ATM-cum-debit card
  • Select mobile registration, you will be asked to enter your ATM PIN, just enter it to proceed.
  • Select SMS/Secure/IMPS and then enter your mobile number.
  • Subsequently press/tap on confirm
  • You will receive 7 digits MMID number on your registered mobile number.
Note: Above ATM procedure is for SBI therefore steps may vary but would remain same.
Beneficiary details needed
  • Mobile Number
  • Mobile Money Identifier (MMID): Number issued (usually 7 digits) by the bank upon registration of mobile banking or the like you received upon mobile banking registration.
How to transfer funds using IMPS
You can send/receive money through IMPS by using ATM, Mobile, or Internet Banking. For more information, contact your bank.

(b) National Electronic Fund Transfer System

This is another reliable, secure, and efficient way of electronic money transfer, which allows fund transfer in near real time (if transferred within working time slots). Those who have to transfer funds up to 10 lacs can use NEFT. There are no minimum caps even you can send 1 rupee. Unlike IMPS, NEFT works on time slots which means you may or may not transfer amount anytime but beneficiary will receive the amount according to the time slots. It is noticeable that this system may not work on Sundays and national holidays.
There are currently 12 time slots from 8am to 7pm on week days. If you send the amount before 5pm then receiver may expect the credit on the same day or instantly. On the other hand, transfer after the bank working hours may take some time or a day.
Feature of NEFT
  • There are no inward transaction charges.
  • You can send up to 10 lacs. 
  • Receiver details required
  • You would need beneficiary name, account number along with bank name, and IFSC code of his bank branch. 
How to do NEFT
You can login to internet banking service of your bank to do NEFT. You may also contact your bank’s customer care department for information regarding it.

(c) Real Time Gross Settlement System (RTGS)

A real time electronic money transfer system that allows you transfer fund from your account to beneficiaries within the bank business hours. Like NEFT, it also does not work on Sundays and national holidays. There are no upper cap limits of transfer but lower limits exist. Minimum amount that can be transferred is Rs. 2 lacs.
Features of RTGS
  • Minimum transfer limit is 2 lacs 
  • There are no upper cap limits
  • This facility is available on all business working days except Sundays and holidays. (may vary) 
How to do RTGS
You can use internet-banking service of your bank to transfer funds through RTGS. For further queries, contact your bank representatives.

3. Explore Plastic Money Options

Many sellers accept payments through credit cards, debit cards, and pre-paid cards. Therefore, you can locate point-of-sale (POS) terminals to pay for your shopping bills, hotel bills, restaurant bills etc. Usually, at POS terminals you swipe your card to pay for goods or services.
Tip: Do ask if there is any additional fee or not before swiping your card at POS.

4. e-Wallet

It is an emerging payment gateway and lucrative cash back offers make it more admirable. Basically electronic wallets allow you add money to them from your bank accounts using your credit card or debit card etc and then you can use that amount to pay for your online shopping, bills, fuel charges, taxi charges, and tickets etc.
It is highly recommended because many e-Wallet apps pay you interest as your bank pays on your bank account. You get interest if you have not used the amount that you have added into your electronic wallet.
As of now digital wallet system is evolving very rapidly. Many financial institutions and e-Commerce websites like SBI Bank Buddy-mobile wallet, Paytm wallet, PayPal, Freecharge wallet, and the like, offer digital wallet facilities.

5. Wire Transfer

Another important digital fund transfer gateway, which allows you, transfer funds overseas. This is an old, trustable, and frequently used method to transfer funds from country to country. You can use this payment gateway if you need to send or receive money from abroad. This type of money transfer subjects to different taxes and charges and it usually takes 5-7 days to complete transactions.
Extra: Seek Durable Finance Facility to Buy Electronic Goods
Extra: Nowadays many finance intitutions offer durable finance facility therefore you can consider this option if you are running short of funds. Many companies offer durable finance facility on 'No Cost EMI' which means you only pay actual cost of the product through equated monthly installments. 
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