Types of Online Financial Transactions

The Government of India came up with a new initiative as a part of “Digital India” campaign. They set up a digital payment system in the nation. It was set up for the “Cashless, Faceless, paperless” economy.

The Economic Times gave a report on online transactions. It stated that,” There will be 66.6 billion transactions expected to shift from cash to cards in India. This transaction will be worth $270.7 billion.”

Now let’s discuss all about online financial transactions.

What is internet banking?

Internet banking is an electronic payment method. It allows bank customers or other financial institutions to do financial transactions. Net banking is also known as virtual banking, online banking or e-banking.

The person has to register themselves at their respective bank for online banking. After the registration, he/she has to visit the bank to avail online banking facilities.

Features of internet banking

The best features of internet banking are as follows-

• Secure account with unique ID & Password
• Access to financial & non-financial services of the bank
• Check bank balance at any time
• Make bill payments
• Transfer funds to other bank account
• Buy General Insurance
• Apply to issue cheque book
• Keep a check on loans, savings, mortgages, etc.
• Cancel or set-up standing orders or automatic recurring payments
• Check investment info linked to the bank account.
• Online shopping
• Print or view account statement

Benefits of internet banking

The user will have the following benefits of internet banking-

Available 24/7

The service of internet banking is not restricted with time unlike banking hours. It is available 365 days & 24/7.

The customer can check Account statements, Bank balance & more.

Convenient to do financial transactions

Internet banking supports customers to conveniently do fund transfer and bill payments. The customer can access all the banking services without physically visiting the bank. They can transfer funds in their account or other account as per their convenience.

Prompt and secure

A user can promptly make a fund transfer via RTGS, NEFT or IMPS. They can secure their account with a strong password & ID. One can easily make

• Loan payments,
• EMI payments,
• Bill payments, etc.

Non-financial transactions

Online banking enables the customers to have non-financial services like

• Account statement check,
• Application to issue cheque books and more.

Types of online transactions

Generally there are two categories of electronic banking transactions. They are as follows-

1. Online/Remote payment transactions

It is a type of transaction that does not require physical presence of the user & the payment instrument.

2. Proximity payment transactions

It is a transaction type that requires the user to have a mobile phone and card at the transaction point.

The other online transaction type are as follows-

National Electronic Fund Transfer (NEFT)

NEFT stands for National Electronic Funds Transfer. It is a nation-wide payment method that facilitates people to make one-to-one funds transfer. The person, corporate or firm can do NEFT from any bank branch. They can transfer funds to another bank account with any bank branch.

Any person without a bank account can avail NEFT service. He/she will need to deposit cash with instructions to transfer funds via NEFT. They can do it at the branches enabled with NEFT service. However, the maximum amount per cash transaction is limited to Rs. 50,000/-.

Real Time Gross Settlement (RTGS)

RTGS is termed as the real-time settlement of persons’ fund transfers without netting.

“Real Time” refers to the same time process of the instruction when they are received. “Gross Settlement” refers to the fund transfer settlement based on an instruction by instruction method. The payments are finalized and settled in the Reserve Bank of India.

It is primarily used to make large value transactions. A person can transact a minimum Rs. 2 lakh through RTGS. There is no maximum amount for an RTGS transaction.

Immediate Payment Service (IMPS)

IMPS provides quick and 24/7 inter bank electronic transfer service. A person can promptly transfer funds through mobile phones, ATMs and the internet. This tool is safe and economical for financial and non- financial aspects.

Electronic Clearing System (ECS)

ECS is termed as an alternative system to effect payment transactions. It is used to make utility bill payments like:

• Loan repayments,
• Telephone bills,
• Recharge,
• Insurance payment, etc.

The system reduces the issuance need and handling of paper instruments. It provides better customer service to collect or receive payments by companies, banks, etc.

What are the safety tips you should take while making online transactions?

• Usage of genuine anti-virus software
• Change login password every two months.
• Avoid usage of VPN software or public Wi-Fi.
• Ensure that the software of your phone is up to date.
• Prevent your net-banking portal login through mail.
• Avoid usage of public computers for net-banking portal login.

Pros and Cons of making online transactions

The online transaction offers numerous benefits to citizens like

• Transparency
• Cost-effective
• Any time & any-where access
• Convenience
• One stop solution for payments, bills, etc.

There are some risks a customer should be aware of. They must take necessary preventive steps to avoid huge losses.

Some of the safety tips are as follows-

• Never share your OTP, password or login credentials to any person.
• Be cautious before providing online bank details.
• Subscribe to SMS alerts.
• Make an email alert registration for electronic bank transactions (wherever available).
• Promptly inform the bank for any unauthorized electronic banking transaction.

Conclusion

The Government’s vision of a cashless economy had made a highest world record. There were over 25.5 billion transactions recorded in 2020.

Digital banking or online transactions have lots to offer. It provides convenience, strengthens privacy & much more.

This type of banking will restrict the black money flow in the nation. It is because the Government will keep a track of fund movements. Digital banking will lower the high demand of the currency in the long run.

FAQs

Q1. Are there any other benefits that I can get from online transactions?

The other benefits of online transactions that you can get are as follows-

• Less transaction fee
• Discounts and cash backs
• Digital record of all the transactions
• Less risk of theft
• Easy and quick set up, and more.

Q2. What should I keep in mind after buying online products?

You should keep a digital copy of large transactions. Besides this, give a quick check to the items you have received. This will help you to work on the problem, if you have received the unacceptable product.