Loan Singh Explains – 10 Different Digital Payments in India

digital-payments-India

Introduction

With India transforming to become completely digitally empowered, it has made each one us embrace digital processes to a level wherein we are capable to perform transactions via different digital avenues. We at Loan Singh, are obliged to educate our readers about the digital payments that are currently practiced in India. Loan Singh’s digital lending platform has been a game changer in India’s lending solutions. Loan Singh’s online personal loan process takes lesser time, lesser documentation and least efforts to provide salaried individuals with funds in times of any financial emergency.

Although Loan Singh self-initiated its digital lending platform, it has been propelled by the Government of India’s initiatives of introducing more and more digital payment solutions. Let us look at 10 such digital payment avenues.

 

  1. NACH

In 2013, The National Payments Corporation of India implemented ‘National Automated Clearing House’ for banks, financial institutions, digital lending platforms, corporate and various arms of the government, to enable a web based solution to facilitate interbank, high volume & electronic transactions which are repetitive and periodic in nature.

  • Used for making bulk transactions such as dividends, subsidies, EMIs, interest, pension, etc.
  • Also used for collection of payments such as electricity, water, loans, investments, mutual funds, etc.
  • It was setup to consolidate multiple ECS systems running across India
  • It is expected to cover the entire core banking enabled bank branches
  • NPCI intends to provide a single set of rules via NACH
  • NACH is set to provide support to Aadhaar based transactions, as well

Benefits

  • Avoids high interchange fees of the credit card companies
  • Saves processing charges of paper based cheque transactions
  • Financial inclusion through Aadhaar Payment Bridge (APB) system helps transfer subsidies easily
  • Middlemen are avoided
  • NACH is ISO2002 compliant and follows the best security standards for reliability
  • It clears-up the barriers or inhibitors that affected standard practices
  • It is robust, secure and scalable
  • NACH is cost efficient and can be data validated at multiple levels
  • Enables same day processing, despite the bulk number

Loan Singh

Being a digital lending platform, Loan Singh is NACH enabled. This means that you, as a borrower, can opt for an auto debit feature while applying for a personal loan. You don’t have to keep track of your personal loan EMI repayments. By providing Loan Singh with an NACH mandate to debit the EMI amount directly from your account, you are easily preventing the risk of EMI default. This also makes it a simple and stress free option.

 

  1. NEFT

National Electronic Funds Transfer (NEFT) is an electronic funds transfer system maintained by the Reserve Bank of India (RBI).

  • NEFT was started in November 2005
  • Enables Indian bank customers to transfer funds between any two NEFT enabled bank accounts, on a one-to-one basis
  • It is done via electronic messages and does not occur on real-time basis
  • Fund transfers are done in half hourly batches between 8:00 am to 6:30 pm
  • No fund transfers are done on public holidays and some Saturdays (2nd and 4th of every month)
  • It is widely used due to its features of time saving and ease of transactions
  • NEFT can also be done online

Process

  • A bank customer fills in an NEFT form mentioning the beneficiary name, account number, branch name, bank name and IFSC code
  • The originating bank branch prepares a message and sends it to its NEFT Pooling center
  • From there, the message goes to the NEFT Clearing center and is added to the next batch
  • Accounting entries are prepared and forwarded to the destination bank
  • Upon receiving, the destination bank passes on the credit to the beneficiary’s account

Charges

Inward transactions at destination bank branches – Free

Outward transactions from originating bank

  • For transactions up to Rs.10,001 – Rs.2.50 + GST
  • For transactions between Rs.10,001 to Rs.1,00,000 – Rs.5 + GST
  • For transactions between Rs.1,00,001 to Rs.2,00,000 – Rs.15 + GST
  • For transactions above Rs.2,00,000 – Rs.25 + GST

 

  1. RTGS

Real Time Gross Settlement (RTGS) is another electronic funds transfer system maintained by the Reserve Bank of India (RBI).

  • RTGS is a continuous, or real-time, settlement of funds transfer
  • It works on an order-by-order basis (unlike the batch wise of NEFT)
  • The funds settlement takes place in the books of RBI and hence they are final and irrevocable
  • It is primarily used for large value transactions. The minimum amount being Rs.2,00,000.
  • No upper limit for RTGS transactions
  • The beneficiary bank needs to credit the beneficiary’s account within 30 minutes of fund transfer
  • Fund transfers are done in half hourly batches between 8:00 am to 6:30 pm
  • No fund transfers are done on public holidays and some Saturdays (2nd and 4th of every month)

Charges

Inward transactions at destination bank branches – Free

Outward transactions from originating bank

  • For transactions between Rs.2,00,000 & Rs.5,00,000 – Rs.30 + GST
  • For transactions above Rs.5,00,000 – Rs.55 + GST

Requirements

The remitting customer has to furnish the following information for initiating an RTGS remittance

  • The amount to be remitted
  • Remitting customer’s account number
  • Beneficiary’s name, bank and branch
  • IFSC code of receiving branch

 

  1. IMPS

The majority of today’s interbank mobile fund transfer transactions are done via the NEFT mechanism. Keeping the same context in mind, the National Payments Corporation of India (NPCI) conducted a pilot study on the mobile payment system with different banks such as SBI, BOI, UBI, ICICI, etc. Soon more banks, such as Axis, Yes and HDFC, also joined-in, and by 22nd November 2010, Immediate Payment Service (IMPS) was launched.

  • IMPS offers instant fund transfer facility
  • Can be done 24×7
  • Allows interbank electronic fund transfer through the mobile platform
  • Considered safe and economical

Eligibility and Process

The participants for IMPS are Sender, Beneficiary, Banks and NPCI.

  • You need to register yourself with the bank’s mobile banking service
  • Get an MMID (Mobile Money Identifier) and MPIN from the bank
  • Download the software application or use the SMS facility, if enabled
  • Beneficiary should link his/her mobile number to the account in their respective bank
  • Get MMID from their bank
  • To transfer funds, the sender must login in to the application and add the Beneficiary’s mobile number, amount to be sent, beneficiary’s MMID and MPIN
  • Await confirmation SMS for the debit from your account
  • Share your MMID and mobile number with the Beneficiary

 

  1. CTS

Around 4 years ago, some of you might remember seeing advertisements in newspapers wherein banks urged us to stop circulating non-CTS compliant cheques and to replace our old cheque books with new CTS enabled ones. What is this CTS?

In the beginning of April, of 2013, Cheque Truncation System (CTS) was implemented whereby the flow of the physical movement of cheque would be eliminated in the cheque clearing process. Instead, an electronic image would be sent forward along with the relevant information. The previous cheque standard was phased-out since then till 2013. The cheque system since 2013 is enabled with CTS.

Benefits

  • No need for movement of physical cheques across branches
  • Eliminates costs associated with movement of physical cheques
  • Time required for transportation is reduced
  • It is a system being followed around the world in banking sectors
  • Makes the widely used offline cheque process more efficient
  • No fear of loss of physical cheques
  • Quicker clearance with shorter clearing cycle
  • Quicker disbursements as same day clearance is enabled
  • CTS takes out the risk of fraud
  • Integration of multiple locations will reduce geographical restrictions

 

  1. UPI

The United Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application. NPCI conducted a pilot launch with 21 member banks in 2016. Several banks have now uploaded their UPI enabled smartphone applications on the Google Play Store, since August 25th 2016.

Features

  • UPI merges several banking features making it seamless in fund routing and merchant payments
  • It caters to the ‘Peer-to-Peer’ collected request which can be scheduled and paid as per requirement
  • Immediate money transfer through a mobile device round the clock
  • Single mobile application for different bank accounts
  • ‘Single Click, 2-Factor Authentication’ allows strong seamless single click payment
  • Bill sharing with friends is now possible
  • Eradicates the hassles for COD, ATM withdrawal and carrying exact change
  • Scheduling of PUSH and PULL payments for various purposes

 

  1. USSD

Started by NPCI, Unstructured Supplementary Service Data (USSD) channel allows mobile banking transactions for basic feature mobile phones. There is no need to have a mobile internet data facility to enable USSD on feature phones. It is envisioned to provide financial deepening and inclusion of the under-banked society into mainstream banking services.

Activation

  • A new USSD account would need the applicant to provide KYC
  • The bank account should be linked to your mobile number
  • Need to register for USSD/Mobile banking
  • Get an MMID and MPIN (similar to IMPS)
  • It takes 2-3 minutes for USSD to be activated on your feature phone
  • To start the activation dial *99# (Common across all Telecom Service Providers)

Services

  • You can check your bank balance
  • Transfer funds making use of MMID, MPIN and OTP; with transfer limit being Rs.5,000 per day and Rs.50,000 per year

 

  1. Debit & Credit Card

Debit cards, as we all know, are plastic cards that allow us to withdraw money directly from our bank account. The money can be withdrawn from an ATM. Debit cards can also be used for transactions on web stores. A debit card is tied directly to your banking account.

A credit card is a type of unsecured credit wherein you are assigned a revolving credit that you can spend. You need to pay back the spent amount at the end of a billing cycle, which is usually 30 days.

 

  1. PPI

Prepaid Payment Instruments (PPI) facilitate transactions related to funds transfer, purchase of goods and services against the value stored on such instruments. The value stored on the PPI represents the value paid by the holders by cash or through their bank accounts. Examples of PPI are smart cards, magnetic stripe cards, internet accounts, digital wallets, mobile wallets, paper vouchers, etc. PPI is regulated by RBI and are generally of 3 types – Closed system, Semi-closed system and Open system payment instruments.

 

  1. Mobile Banking

It is a service provided by banks or financial institutions to allow its customer to conduct financial transactions remotely using a mobile device such as a smartphone or a tablet. Unlike in internet banking, mobile banking makes use of mobile applications developed by the respective institutions.

Features

  • Transactions include obtaining account balances or statements
  • Online bill payments
  • Reduces the cost of handling transactions by reducing the need for customer to visit the bank or billing counter
  • Alerts on account activity are available
  • Allows access to loan information, term deposits, etc.

 

9 thoughts on “Loan Singh Explains – 10 Different Digital Payments in India

  1. Pingback:Loan Singh Explains – The Presence of Digital Wallets in India

  2. Pingback:Loan Singh Explains – The Concept of UPI (Unified Payments Interface)

  3. I used to be suggested this web site by my cousin. I’m now
    not sure whether or not this submit is written through him as no one else realize such special approximately my difficulty.
    You are amazing! Thank you!

  4. I just wanted to construct a brief note so as to say thanks to you for those pleasant instructions you are writing on this website. My rather long internet lookup has now been honored with incredibly good ideas to write about with my contacts. I would assume that most of us visitors are unquestionably lucky to be in a notable community with many brilliant people with very helpful principles. I feel rather privileged to have discovered the web pages and look forward to so many more enjoyable times reading here. Thanks once again for a lot of things.

  5. Oh my goodness! an amazing article dude. Thanks Nevertheless I am experiencing situation with ur rss . Don’t know why Unable to subscribe to it. Is there anyone getting equivalent rss downside? Anyone who is aware of kindly respond. Thnkx

Leave a Reply

Your email address will not be published. Required fields are marked *