Are you tired of standing in line for cash? Or do you find yourself in possession of a newly minted Rs 2,000 note, and unable to buy what you want at your local store? If so, it is probably time for you to consider going cashless.
Since the demonetisation of Rs 500 and Rs 1,000 notes by the central government on November 8, the ensuing cash crunch has resulted in a spurt in online transactions, especially the use of mobile wallets.
There are now several non-bank mobile wallets, but the more popular ones are Paytm, Mobikwik, Freecharge, Citrus Pay, and Oxigen Wallet. Several banks have also introduced their own renditions of the mobile wallet in a bid to stop customers from transferring money out of savings bank accounts, one of the cheapest deposit services that a bank offers.
A mobile wallet is a digital version of what you probably carry in your pocket or handbag. It is probably most useful when trying to buy a product or service which is paired with the mobile wallet.
Take for example Uber’s taxi service. The taxi aggregator tied up with Paytm very early on. The larger mobile wallets now have scores of merchants that they have tied up with and offer attractive discounts and cash-backs to attract more customers.
To transfer money to a mobile wallet, you simply have to use net banking or your debit card and send money to the application that you have downloaded. There are limits to how much money you can store on your mobile wallet.
The Reserve Bank of India has stipulated that without KYC (know your customer) information, an individual can have a maximum of Rs 10,000 on his or her mobile wallet at any given time during the month. In the wake of the demonetisation drive, however, this has been raised to Rs 20,000.
If KYC information has been submitted however, the individual can hold up to Rs 1 lakh. Currently, only Paytm offers the option to raise the limit by providing KYC information.
The drawback with these wallets is that there is a limit to the amount of money you can transfer to other wallets, and also what you can send from your wallet to your bank. This is currently set at Rs 25,000 for a month.
What Banks Offer
The traditional modes of non-cash payment include cheque and demand draft, and while those options are available, there are faster ways making or accepting payments.
Internet banking through payment interfaces like the Real Time Gross Settlement System (RTGS) and National Electronic Funds Transfer (NEFT) have also been available for some time now. A newer method of online payment, though, is the Immediate Payment Service (IMPS).
The IMPS is probably the best option out of the three. As its name suggests, it facilitates instantaneous transfer of money to another bank account. The limit per transaction has been set at Rs 1 lakh. The drawback though, is that you need to key in the beneficiary’s account number, and the code of the branch.
But the payment option that had everyone in banking circles excited a few months back is the National Payment Corporation of India’s (NPCI) Unified Payment Interface (UPI). This is a mobile first payment solution that allows you to transfer money instantaneously to anyone else using a UPI-enabled application.
The process is quite simple:
1. Download your bank’s mobile application (assuming that your bank has joined the UPI network).
2. Select the UPI option in the application and create what is known as a virtual payment address. This is like an e-mail address and will be unique to you. An individual can operate multiple bank accounts, and therefore multiple virtual payment addresses on the same mobile app.
3. Then, to transfer money to someone, you simply need their virtual payment address, which would read something like “abcd@icici”.
4. Select the amount you want to transfer. Some banks applications will require you to enter some of the numbers from the grid on the back of the debit card that is paired to your bank account. Once you have entered these numbers, hit “submit”.
5. The transfer takes place within a few seconds, and if it has gone through, you receive a message saying that the transaction was successful.
The process for collecting money from someone who owes you is similar and can be initiated by selecting the “collect” option instead.
Debit Cards And Credit Cards
You can make transactions at several places with your debit or credit cards by simply swiping them at a point of sale (POS) terminal. You can also use your cards to buy products and services online.
Transacting Using An SMS
The Unstructured Supplementary Service Data was an attempt by the NPCI to ride the wave of the mobile phone boom in India. And it is probably a service you have never heard of.
It uses your GSM mobile phone’s voice service and not data, so it is probably the service that can be most widely used. Remember, there are close to 100 crore GSM mobile device users in India, according to the country’s telecom regulator.
To use it, you must activate mobile banking on your device. Once you have done that, you simply dial *99#. A pop-up menu will then open up on your mobile phone’s screen and it will ask you to enter a shortened version of your bank’s name, or the first four digits of your IFSC code.
Once that is done, another menu opens up with several options, including one to send money to another user.
The limit per transaction has been set at Rs 5,000, probably one of the reasons why this service has not taken off in a big way.