A must read on Digital payments and important points

Our country is moving towards the Digital phase, which involves digitalisation of Governance, Banking, Mobility,Security,Currency and so on. However, there are some important aspects you need to consider while thinking about and making digital payments. Everything comes at a cost!

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What is Digital Payment?

Digital payment is transfer of payment from one bank account to another or from one person to another through a Digital Mode, without using any form of physical currency. Digital payments are not implemented across the globe due to a lot of criteria namely, deficiency of digital services from your banks, not being aware of Digital Payments and ways of making such payments and so on. I will not cover the whole topic out here because it is a very fast topic to deal with. I will cover the basics of it. 

Are Digital Payments Free? 

NO. Digital Payments are not free. Yes there are advertisements everywhere of online banking, paytm karo and all of that. But people are not aware that on any transaction that you make there will be a convenience fee , or payment processing fee that is applied by your banks. Let me give you an example. 

There are different forms or Digital payments available. 

1. NEFT(National Electronics Funds Transfer) - This involves transfer of payments between two parties up to 2 lac rupees. This payment happens in batches. I think the batch in the evening , say NEFT done after 5-5:30 PM goes in the next morning of processing. 

The structure of charges that can be

a) Inward transactions at destination bank branches (for credit to beneficiary accounts):

• Free, no charges to be collected from beneficiaries

b) Outward transactions at originating bank branches (charges for the remitter):

• For transactions up to ₹10,000 (not exceeding) : ₹2.50 (+ Service Tax)
• For transactions above ₹10,000 up to ₹1 lakh (not exceeding) : ₹5 (+ Service Tax)
• For transactions above ₹1 lakh and up to ₹2 lakhs (not exceeding) : ₹15 (+ Service Tax)
• For transactions above ₹2 lakhs : ₹25 (+ Service Tax)

Source: Wikipedia. 

This may vary for each bank. 

2. RTGS(Real Time Gross Settlement) - This involves transfer of payments between two parties from 2 lac Rupees onwards and happens in a real time basis rather than batch settlement. You can do this via net-banking also. 

Service charges are more or less like NEFT only. 

3. IMPS(Immediate Payment Service) - This involves transfer of money between two parties on an immediate basis. As in RTGS may take a while for it to be executed but it does not happen immediately. Whereas IMPS happens immediately the moment you transact in your net-banking. If you see players like Paytm and Mobile wallets use this service mostly for person to person transactions. 

It does not require you to use beneficiary in nationalised banks. Just A/C number , MMID , or Merchant ID is enough. For private banks beneficiary is a must. 

NOTE: ALWAYS APPLY FOR NET-BANKING FACILITY WITH BANKS WHEN OPENING A/C. 

Net-banking enables you to do all of the above. You can also opt for cheque with form based NEFT/RTGS/IMPS for higher value transactions if you do not have net-banking. Beneficiary is a account that you add in your net-banking so that you can carry out the above transactions with them. 

After adding beneficiary it normally takes 8-12 hours before you can start making payments and 24 hours before you can start making limitless payments. 

There are several other options other than these like, Bitcoin which is a universal currency, that you can use at several countries. It is an open source project and not affiliated with a financial institution. Imagine it like a Forex Card but online. 

Paypal is also one of the best ways to transfer and receive money from abroad however from India you cannot send money abroad, unless you use a credit card which is very expensive. Alternative to paypal is Skrill , Western Union and so on. 

For mobile based wallet, google also has their ever popular mobile wallet called Google Wallet. Just works like paytm. In US, Apple Pay is very popular and they are brining payment solutions throughout the world slowly.