Modes of Transaction in Indian Banking System

Modes of Transactions in the Indian Banking System: A person does some transactions on a daily basis. People do transactions with the other party, whether to buy groceries or for shopping or to sell something. Even if they go to banks to deposit or withdraw money, they have to do some transactions.

There are many methods of doing transactions in the banking system. However, with the advancement of digitalisation, the most used payment methods in India are digital transactions. Nowadays, people are doing digital transactions, from buying fruits to electronics items to bikes or cars. Continue reading the article to learn more about modes of transactions in India.

What are the Different Modes of Transaction in Indian Banking System?

There are mainly two types of transactions available in the Indian Banking System. One is offline and another is online/digital. Payment through cash and cheque are considered in the offline mode of transaction. On the other hand, payment through cards, internet banking, wallets, etc., are considered the online mode of transaction.

Cash and cheque transactions are done since the banking system first started in India. People are doing cash transactions using various notes of Rs. 10, Rs. 20, Rs. 50, Rs. 100, and so on in their day-to-day expenses. In comparison, cheque transactions are used for large payments between people to people or banks.

As offline transactions are common, let’s continue to understand various digital transactions in the Indian Banking System.

Types of Digital Payments in India

Nowadays, digital transactions are one of the most used payment methods in India. Check various types of digital payments in India below:

Bank Cards

The bank issues ATM, debit, and credit cards to its customers that they can use for all digital transactions. Bank customers can use their cards to purchase any product offline as well as online. They can use debit/credit cards offline in shopping malls, movie theaters, restaurants, ATMs, etc. Furthermore, they can use their debit/credit cards on online websites for purchasing any product, buy electronics items, book travel tickets, and many more.

Internet Banking

Internet banking is also known as online banking, e-banking, or virtual banking. It is a digital payment system that enables people to do financial transactions through the bank’s website. There are four types of transactions in Internet banking:

• National Electronic Fund Transfer (NEFT)
• Real Time Gross Settlement (RTGS)
• Electronic Clearing System (ECS)
• Immediate Payment Service (IMPS)

Mobile Banking

Various banks provide mobile banking services to their customers that allow them to conduct different types of financial transactions using a mobile phone or tablet. To use mobile banking services, customers need to install a mobile banking app provided by banks on their Android, Windows, and iOS devices. Furthermore, the mobile banking app is specific to each bank. Thus, customers need to install the mobile banking app of their respective banks.

Unified Payments Interface (UPI)

UPI is a system that enables people to add multiple bank accounts into a single mobile application for seamless merchant payments. Through UPI, people can make payments to any bank account or UPI without adding the bank details of the receiver. They only need the UPI ID or mobile number of the receiver. Apps like GPay, PhonePe, Paytm, etc., enable users to add multiple bank UPIs and do transactions.

Mobile Wallets

A mobile wallet is another way of carrying cash but in a digital form. Users can add their credit/debit card details in the mobile wallet application and transfer money online to their mobile wallets. Thereafter, they can make payments through their wallet using their smartphone, tablet, or smartwatch. Some examples of mobile wallet apps are Paytm, PhonePe, Amazon Pay,charge, Mobikwik, etc.

FAQs on Modes of Transactions in Indian Banking System

Find some commonly asked questions related to the modes of bank transactions in India below:

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