Digitalisation of Banking – Digital Payment System Commerce YouTube Lecture Handouts Part 1

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Digitalisation of Banking – Digital Payment System | Commerce
Digital Payment System
  • The Indian government has been promoting and propagating online payments aggressively, starting with demonetization back in 2016.
  • ‘Digital India’ had been the guiding force of many economic and financial decisions that pushed Indians to switch to online payments.
  • Digital India Programme is a flagship programme of Government of India. “Faceless, Paperless, Cashless” is one of the professed roles of digital India.
  • Digital Payments are payments that are conducted over the internet and mobile channel.
  • Any payment that is sent online or through mobile computing and internet-enabled devices can be called Digital Payment.
  • The sender having such means, the receiver of the payment too must have these ways to accept payments.

EXAMPLE

  • Google Pay is a new Google app for online money transactions which makes your life much easier.
  • It is basically a digital payment app that helps you get up and run in no time.
  • Previously this app was known as Google Tez.
  • Through this Google app, one can simply send and receive money to anyone using a mobile.

Digital Payment System in India

Banking Cards

Used to store information and cash digitally and for online payments – debit/credit cards, Visa, Mastercard, Rupay, etc.

Bank Prepaid Cards

A prepaid debit card requires that you load the account associated with the card with money before you make a purchase. A debit card, on the other hand, charges you immediately after you make a purchase and deducts the amount spent from your bank account.

Core Banking System (CBS)

It is the networking of various bank branches through a robust IT infrastructure, allows the customers to operate their bank accounts and avail themselves of the banking services with a centralized network which allows its customers to conduct their business irrespective of the bank՚s branch. Thus, it removes the impediments of geo-specific transactions.

Unstructured Supplementary Service Data (USSD)

Launched for those sections of India՚s population which don՚t have access to proper banking and internet facilities. Mobile banking transactions are possible without an internet connection by simply dialing 99# on any essential feature phone. Allows customers to avail of services including interbank account to account fund transfer, balance inquiry, and availing mini statements even in Hindi language.

Bharat Interface for Money App (BHIM)

A payment app that lets you make simple, easy and quick transactions using Unified Payments Interface (UPI) . Direct bank payments can be made to anyone on UPI using their UPI ID or scanning their QR with the BHIM app.

Unified Payments Interface (UPI)

It allows transfer of money from one bank account to another instantly via one՚s mobile phone. Payments can be made via app on mobile device only. The money transfer via UPI works on basis. The main advantage of UPI is that it enables users to transfer money without a bank account or IFSC code. All you need is a Virtual Payment Address (VPA) . There are no transaction charges for using UPI.

Virtual Payment Address

Mobile Wallets

A mobile wallet uses a bank account, debit or credit card information to process payments and the payment details are stored in a secure and encoded format. A mobile money wallet too stores currency to make payments and purchases.

Mobile Banking

Digital payment methods, such as IMPS, NEFT, RTGS, IMPS, investments, bank statements, bill payments, etc. , are available on a single platform in mobile banking apps.

Micro ATMs

A device for Business Correspondents to deliver essential banking services to customers. Money is transferred via your Aadhaar linked bank account by merely authenticating your fingerprint.

Aadhaar Enabled Payment System (AEPS)

  • To facilitate inter-operability across banks in a safe and secured manner. Services offered - Cash Deposit,
  • Cash Withdrawal, Balance Enquiry, Mini Statement, Aadhaar to Aadhaar Fund Transfer Authentication,
  • BHIM Aadhaar Pay, eKYC, Best Finger detection,
  • Demo Auth, Tokenization, Aadhaar Seeding Status

PoS Terminals

A point-of-sale (POS) terminal is a hardware system for processing card payments at retail locations. Invoice is generated and payment is made through cards. Software to read magnetic strips of credit and debit cards is embedded in the hardware.

Internet Banking

Also known as Internet banking or web banking, offers customers almost every service traditionally available through a local branch including deposits, transfers, and online bill payments.

Contactless Payment

Contactless payment systems are credit cards and debit cards, key fobs, smart cards, or other devices, including smartphones and other mobile devices, that use radio-frequency identification (RFID) or near field communication (NFC, e. g. , Samsung Pay, Apple Pay, Google Pay, Fitbit Pay, or any bank mobile application that supports contactless) for making secure payments.

Europay, MasterCard, and Visa

Europay, MasterCard, and Visa

  • EMV is short for Europay, MasterCard, and Visa, the 1994 founders. It commonly refers to a credit card with a smart chip.
  • The EMV standard is a security technology used worldwide for all payments done with credit, debit, and prepaid EMV smart cards.
  • EMV is a common standard used by major credit card and smartphone companies for use in general commerce.

National Electronic Fund Transfer (NEFT)

Enables bank customers in India to transfer funds between any two NEFT-enabled bank accounts on a one-to-one basis. It is done via electronic messages.

Real Time Gross Settlements (RTGS)

A funds transfer system that allows for the instantaneous transfer of money and/or securities. It is the continuous process of settling payments on an individual order basis without netting debits with credits across the books of a central bank.

Society for Worldwide Interbank Financial Telecommunication (SWIFT)

A method of making an international money transfer sent by the SWIFT international payment network. It is the largest financial messaging systems in world.

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