Welcome to Your Ultimate Guide to Electronic Payment system
Step into the world of electronic payment systems with us on this blog. We will take a deep dive into the intricacies of NEFT, IMPS, RTGS, payment gateways, debit cards, and credit cards. These topics are of utmost importance in IT-TRENDS subject in courses like PGDCA, DCA, O Level, CCC, BCA, MCA, and more. Explore how these systems enable smooth transactions and meet the diverse needs of consumers and businesses.
Join us as we navigate through the labyrinth of digital transactions, unlocking the secrets behind NEFT, IMPS, RTGS, payment gateways, debit cards, and credit cards which is the major Topic in Subject like IT-TRENDS in the courses like PGDCA, DCA, O Level, CCC, BCA, MCA and More.
By the end of this journey, you'll gain a profound understanding of how these systems operate, empowering you to make informed decisions and harness the full potential of electronic payments in today's dynamic financial landscape.
Stay tuned for our latest updates, and let the exploration begin!
Electronic Payment system
An
e-payment system is a way of making transactions or paying for goods and
services through an electronic medium, without the use of cheques or cash. It’s
also called an electronic payment system or online payment system.
The
electronic payment system has grown increasingly over the last decades due to
the growing spread of internet-based banking and shopping.
The advancement of technology has led to the emergence of electronic payment systems and payment processing devices. As a result, online payment transactions have become more secure, ensuring the protection of sensitive financial information. Additionally, with this technological progress, we can anticipate a decline in the percentage of cheque and cash transactions.
Electronic Payment Methods
Electronic Payment Methods
E-payment
methods could be classified into two areas,
Credit
payment systems and Cash payment systems.
Credit Payment System
A credit payment system allows consumers to make purchases using credit, borrowing money from a financial institution and promising to repay it later. This system enables convenient transactions without requiring immediate cash. Credit cards, lines of credit, and loans are common forms of credit payment. However, it's essential for users to manage credit responsibly to avoid debt accumulation and maintain a good credit score for future financial endeavors.we can use the following system of cerdit payment system
Credit Card:-
A type of electronic payment system that mandates the utilization of a card issued by a financial institution to the cardholder for completing online transactions or utilizing an electronic device, without the necessity of cash.
E-wallet:-
A type of prepaid account designed to conveniently store a user's financial information, such as debit and credit card details, to enhance the ease of online transactions.
Smart card:-
A chip card, also recognized as a plastic card with an integrated microprocessor, offers the convenience of loading funds to facilitate transactions.
Cash Payment System
A cash payment system involves transactions where physical currency, such as coins and banknotes, is used to settle purchases or debts. This system provides immediate and tangible exchange of value, requiring no electronic processing or bank involvement. Cash payments offer anonymity and can be used in areas with limited or no access to electronic payment methods. However, they require careful handling to prevent theft or loss, and their usage is declining with the rise of digital payment alternatives.
1. Direct debit :-
Direct debit refers to a financial transaction wherein the account holder provides instructions to the bank to electronically collect a specific sum of money from their account in order to make payments for goods or services.
2. E-cheque:-
It is a digital rendition of a traditional paper check. It involves the electronic transfer of funds from a bank account, typically a checking account, without the need for a physical check.
3. E-cash:-
It represents an electronic payment system where a designated sum of money is stored on a client's device and can be accessed for online transactions.
4. stored-value card:-
A stored-value card is a card that holds a predetermined amount of money and can be utilized for transactions at the issuing store. Gift cards serve as a common example of stored-value cards.
Real-time gross settlement (RTGS)
RGTS
Real-time gross settlement (RTGS) is a financial transaction system where transfers between banks occur instantaneously and on a one-to-one basis. It ensures immediate settlement of high-value transactions without waiting for batch processing. RTGS is widely used for large-scale, time-sensitive payments such as interbank transfers, securities trading, and corporate payments. Its real-time nature reduces systemic risk and enhances efficiency in the financial system, but it typically involves higher fees compared to other payment methods.
The real-time gross settlement system is built upon this principle. Settlement takes place immediately upon receipt in real-time, with the transaction being settled at the receiving bank right after it is transferred from the sending bank. In a gross settlement system, transactions are processed and settled individually, without being combined or grouped together.
The standard practice for transferring large sums of money between banks is through an RTGS system,
which is administered and structured by the central bank of a particular country.
Such transfers commonly demand instantaneous and thorough processing,
once the transactions are finalized, they are irrevocable.
How RGTS Work
IMPS
IMPS
IMPS (Immediate Payment Service) is a real-time electronic fund transfer system in India. It allows individuals to transfer money instantly and securely between bank accounts using mobile phones, internet banking, ATMs, or through bank branches. IMPS operates 24/7, enabling quick transactions even outside traditional banking hours. It is widely used for various purposes, including person-to-person transfers, bill payments, and online shopping. IMPS offers convenience and flexibility, revolutionizing the way people conduct financial transactions in India.
how IMPS Works
The IMPS payments can be made 24/7 and 365
days in a year. Thus, there is no disparity or hindrance in transferring funds
with IMPS even during bank or public holidays.
IMPS transactions flow Work
IMPS is an acronym for Immediate Payment Service.
IMPS allows for round-the-clock and year-round payments.
Generally, IMPS allows for payments up to ₹ 20 Lakh.
IMPS p2a transactions have no minimum fund transfer limit.
The charges for fund transfers on IMPS may vary from ₹ 2.5 to ₹ 15, excluding GST.
IMPS payments are highly secure and protected through end-to-end encryption.
NEFT
NEFT
NEFT, also known as National Electronic Funds Transfer, is a widely utilized electronic payment system in India that allows individuals and businesses to electronically transfer funds between bank accounts. Transactions through NEFT are processed in batches at specific intervals during the day and are usually settled within a few hours. This system is commonly used for a variety of purposes such as salary payments, bill settlements, and online purchases. NEFT provides a secure, convenient, and cost-effective method for transferring money, playing a crucial role in the digitalization of financial transactions in India.
NEFT offers the following advantages for funds transfer or receipt:
NEFT Transfer Process
1. 24/7 availability every day of the year
2. Almost instant funds transfer to the recipient's account and secure settlement
3. Remitter receives confirmation via SMS/email upon credit to the beneficiary's account
4. Savings Account customers are not charged for online NEFT transactions
5. NEFT system can be utilized for various transactions, such as paying Credit Card dues and loan EMIs to banks.
Difference between NEFT/RGTS/IMPS
Difference between NEFT/RGTS/IMPS
Payment gateway
A payment gateway is an online service that facilitates the secure transmission of payment information between a merchant's website or application and the financial institutions involved in processing the transaction. It encrypts sensitive data such as credit card numbers and ensures that payments are processed swiftly and securely. Payment gateways play a crucial role in e-commerce by enabling customers to make purchases online using various payment methods like credit cards, debit cards, digital wallets, and bank transfers. They help businesses accept payments seamlessly, enhancing the customer experience while safeguarding against fraudulent activities and ensuring compliance with payment industry regulations.
Payment gateway
Debit
Card
A debit card is a payment card issued by a financial institution to its customers, allowing them to access funds directly from their checking or savings account. When making a purchase, the cardholder can use the debit card to electronically transfer money from their bank account to the merchant's account. Unlike credit cards, which involve borrowing money from the card issuer, debit cards enable immediate payment using available funds in the linked account. Debit cards are widely accepted for in-store and online transactions, offering convenience and easy access to one's own funds.
how Debit card make payments
Debit cards provide a convenient alternative to carrying cash or physical checks for transactions, and they are accepted at ATMs for cash withdrawals.
Debit cards typically come with daily spending limits, which could restrict the ability to make high-value purchases.
Transactions with debit cards can be completed with or without entering a personal identification number (PIN).
Certain debit cards come with reward programs akin to those offered by credit cards, such as earning 1% cash back on all purchases.
Credit Card
A credit card is a payment card issued by a financial institution that allows cardholders to borrow funds to make purchases, subject to an agreed-upon credit limit. Unlike debit cards, which draw funds directly from the cardholder's bank account, credit cards provide a line of credit that must be repaid, usually on a monthly basis, along with any accrued interest. Credit cards offer convenience, flexibility, and various perks such as rewards programs, cashback incentives, and travel benefits. They are widely accepted for in-person and online transactions globally, making them a popular choice for consumers.
Credit Card Payment Cycle
1. Credit cards are a form of payment that allows individuals to make purchases based on their promise to repay the amount owed. Interest is charged on these purchases, typically starting one month after the transaction is made. The borrowing limits on credit cards are determined based on the individual's credit rating.
2. By using a credit card, individuals can buy goods and services with the understanding that they will pay for them later. The card issuer establishes a revolving account and provides a line of credit to the cardholder, allowing them to borrow money for purchases or cash advances.
3. Valid credit card holders have the privilege to make purchases up to a predetermined credit limit. This limit represents the maximum amount they can spend on goods and services.
4. When a credit card transaction occurs, the vendor receives necessary information from the cardholder. However, it is the bank that issued the card that reimburses the vendor. The cardholder then repays the bank through regular monthly payments.
5. If the entire balance is not paid in full, the credit card issuer can legally charge interest fees on the unpaid portion
Credit card cycle
how credit card works
1. Credit purchase involves the acquisition of goods and services using a card as a form of payment.
2. Credit card processing occurs when a merchant verifies an authenticated credit card, records its number, and obtains the cardholder's signature on specific documents before delivering the goods.
3. After a purchase, the merchant raises a bill and forwards it to the credit card issuing bank for payment.
4. The issuing bank then pays the amount owed to the merchant establishment.
5. Subsequently, the issuing bank generates a bill for the credit cardholder and sends it for payment.
6. Finally, the credit card holder makes the payment to the issuing bank to settle the bill.
Internet Banking
Internet Banking, also recognized as net-banking or online banking, is an electronic payment system that permits customers of a bank or financial institution to carry out financial or non-financial transactions online via the internet, providing access to a wide range of banking services typically offered at a local branch. Through internet banking, customers can perform tasks such as checking account balances, transferring funds between accounts, paying bills, applying for loans or credit cards, and managing their financial accounts remotely, anytime and anywhere with internet access. It offers convenience, efficiency, and security, revolutionizing the way people interact with their banks and manage their finances.
Internet Banking
Access to internet banking is available to all individuals who have enrolled for online banking with their respective bank or financial institution and possess an active bank account. Once registered, customers are no longer required to physically visit the bank in order to access banking services. This method of banking is not only convenient but also ensures security. Net banking portals are safeguarded by distinctive User/Customer IDs and passwords.
Mobile Wallet
A mobile wallet, also known as a digital wallet or e-wallet, is a virtual platform that allows users to store, manage, and transact with various forms of digital currency or payment methods using a mobile device. Users can securely store their credit card information, bank account details, loyalty cards, and even cryptocurrency within the mobile wallet application. Mobile wallets enable users to make purchases online and in-person, send money to friends or family, pay bills, and access loyalty rewards, all from their smartphones or tablets. They offer convenience, speed, and often incorporate advanced security features like encryption and biometric authentication.
Mobile Wallet
Points to remember
1. A mobile wallet is essentially a digital version of your physical wallet, residing on your mobile device for easy access. The convenience lies in the ability to make payments for purchases using your smartphone, smartwatch, or tablet.
2. By storing all your credit cards, loyalty memberships, and reward cards in one place, a mobile wallet can streamline your payment process and potentially enhance security measures against fraud. The digital format makes it more challenging for thieves to steal or replicate your information.
3. Various smartphone applications provide access to mobile wallets, with options available from companies such as Apple and Android. Additionally, most credit card issuers offer their own versions of mobile wallets, simplifying the process of linking your cards and accounts for seamless transactions.
4. A mobile wallet serves as a digital repository for payment card details on a mobile device, enabling users to make in-store purchases at merchants affiliated with the mobile wallet service provider.
UPI
Unified Payments Interface (UPI) is a real-time payment system in India that enables users to instantly transfer funds between bank accounts through a mobile platform. Developed by the National Payments Corporation of India (NPCI), UPI allows individuals to make payments using their smartphones by linking their bank accounts to a unique virtual payment address (VPA). Users can send and receive money, pay bills, and make online purchases securely and conveniently, 24/7, without the need for traditional bank account details like IFSC codes or recipient bank account numbers. UPI has revolutionized digital payments in India, offering speed, simplicity, and interoperability across multiple banks and payment service providers.
UPI
How to set up UPI
Choose a UPI-enabled bank: Select a bank that supports UPI transactions and ensure that you have an active bank account with them.
Download a UPI-enabled mobile app: Install a UPI-enabled mobile banking app provided by your bank or a third-party app that supports UPI, such as Google Pay, PhonePe, or Paytm.
Register: Open the app and follow the registration process, which typically involves verifying your mobile number linked to your bank account and creating a UPI PIN.
Link your bank account: Add your bank account details to the app by selecting your bank and providing the necessary information.
Set up a UPI PIN: Create a secure UPI PIN, which acts as a password for authorizing UPI transactions. This PIN is required for every transaction you initiate.
Generate a virtual payment address (VPA): Create a unique VPA, which serves as your UPI ID and enables others to send money to you. Your VPA usually looks like "yourname@bankname."
Verify your details: Once you've completed the setup process, verify your bank account details and ensure that your VPA is active and ready to use.
Start transacting: Now that your UPI setup is complete, you can start using UPI to send and receive money, pay bills, make online purchases, and perform various other transactions conveniently and securely.
how UPI Works
How UPI works
Initiation: To make a payment using UPI, the payer initiates the transaction through a UPI-enabled mobile app. They specify the recipient's virtual payment address (VPA), mobile number linked to UPI, or bank account details.
Authentication: The payer then enters their UPI PIN to authenticate the transaction. This PIN acts as a secure password and is required for every UPI transaction.
Request to PSP: Once authenticated, the UPI app sends a payment request to the payer's Payment Service Provider (PSP), which could be their bank or a third-party UPI app.
Routing: The PSP routes the payment request to the recipient's PSP, along with necessary transaction details.
Confirmation: The recipient's PSP validates the transaction and sends a confirmation to the payer's PSP.
Settlement: The transaction details are sent to the NPCI (National Payments Corporation of India) for settlement. NPCI then facilitates the transfer of funds between the payer's and recipient's bank accounts.
Completion: Once the funds transfer is completed, both the payer and recipient receive instant notifications confirming the successful transaction.
Overall, UPI streamlines the process of transferring funds between bank accounts, offering a seamless, instant, and secure way to make payments using mobile devices.
What is Paytm?
Paytm stands as the biggest mobile payments and commerce platform in India. Our platform enables you to transfer money instantly to anyone without incurring any charges through the Paytm Wallet. This money can be conveniently utilized for seamless payments at various establishments such as taxi and auto services, petrol stations, grocery stores, eateries, cafes, cinemas, parking lots, drugstores, medical facilities, and local convenience stores.
Paytm
Paytm, an Indian e-commerce payment system and financial technology company located in Noida, Uttar Pradesh, India, can also be utilized for online recharges, utility bill payments, booking movie or travel tickets, and more on its app or website.
•CEO: Vijay Shekhar
Sharma (Dec 2010–)
•Founder: Vijay Shekhar
Sharma
•Founded: 2010, Noida
•Revenue: 3,629 crores
INR (US$510 million, 2019)
•Users: 350 million
(2019)
•Parent organization: One97
Communications
Online Shopping
The concept of online shopping involves the act of purchasing goods or services over the internet from e-commerce websites or online marketplaces. Customers explore virtual catalogs, choose items they desire, add them to a digital shopping cart, and proceed to the checkout process, where payment and delivery details are confirmed. Online shopping offers numerous benefits, including convenience, a wide variety of products, competitive prices, and the ability to shop from the comfort of one's own home. Its increasing popularity has had a profound impact on the retail industry, leading to a reshaping of consumer shopping habits on a global scale.
online shopping
Online marketing
Online marketing, also known as digital marketing, encompasses all promotional activities conducted over the internet to reach and engage with potential customers. This includes a variety of strategies such as search engine optimization (SEO), content marketing, social media marketing, email marketing, pay-per-click advertising (PPC), and influencer marketing. Online marketing aims to increase brand awareness, drive website traffic, generate leads, and ultimately boost sales and revenue. It leverages the vast reach and targeting capabilities of the internet to connect businesses with their target audience effectively and efficiently.
Online Marketing
The methods and techniques used for online
marketing include
email,
social media,
display advertising,
search engine optimization,
Google AdWords and more.
Conclusion
In conclusion , this blog cover a brief description of following topics
Electronic Payment Systems, Types of Electronic Payment Systems, RTGS, IMPS, NEFT, Payment gateway, debit & credit card, internet banking, mobile wallet, UPI, BHIM, PAYTM app, online shopping, online marketing,
In summary, I can say that these topics are related to IT Trends and very helpful for those who pursuing BCA,PGDCA, DCA ,'O' Level Courses from different universities
I hope this blog helps you a lot Happy learning....
Frequently Asked Question(FAQ)
What is E-payment ?
An e-payment system is a way of making transactions or paying for goods and services through an electronic medium, without the use of cheques or cash.
what is rtgs ?
Real-time gross settlement (RTGS) is a financial transaction system where transfers between banks occur instantaneously and on a one-to-one basis.
What is IMPS ?
IMPS (Immediate Payment Service) is a real-time electronic fund transfer system in India. It allows individuals to transfer money instantly and securely between bank accounts using mobile phones, internet banking, ATMs, or through bank branches.
What is UPI ?
Unified Payments Interface (UPI) is a real-time payment system in India that enables users to instantly transfer funds between bank accounts through a mobile platform.
What is Payment gateway ?
A payment gateway is an online service that facilitates the secure transmission of payment information between a merchant's website or application and the financial institutions involved in processing the transaction.
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