Tag: Digital Banking

Mobile Banking is a service provided by financial institutions that allows customers to perform banking transactions using a mobile device, such as a smartphone or tablet. Through dedicated mobile apps or responsive web platforms, users can access features like checking account balances, transferring funds, paying bills, and applying for financial products. Mobile banking operates 24/7, offering convenience, real-time updates, and enhanced security measures like biometric authentication and encryption. It eliminates the need for visiting physical branches, making banking accessible anytime and anywhere. Mobile banking plays a vital role in promoting cashless transactions and improving financial inclusion.

Features of Mobile Banking:

1. Accessibility Anytime, Anywhere

Mobile banking services are available 24/7, allowing users to perform transactions and manage accounts from anywhere in the world. All that’s required is a mobile device and internet connectivity, offering flexibility and ease of use.

2. Account Management

Mobile banking apps enable users to check account balances, view transaction history, and manage multiple bank accounts in real time. This feature ensures complete control over personal or business finances.

3. Fund Transfers

Mobile banking facilitates seamless money transfers through various methods such as NEFT, IMPS, RTGS, and UPI. Users can transfer funds instantly to any account, either domestically or internationally, without visiting a branch.

4. Bill Payments and Recharge Services

Users can pay utility bills (electricity, water, gas), recharge mobile plans, pay credit card bills, and manage subscriptions directly through the app. Scheduled payments and reminders further simplify bill management.

5. Security and Authentication

Mobile banking employs robust security measures like multi-factor authentication, biometric login (fingerprint or face recognition), and encrypted transactions. These features ensure the safety of user data and financial transactions.

6. Investment and Loan Services

Mobile banking apps allow users to invest in mutual funds, fixed deposits, or equities. Additionally, they provide access to loan application features, enabling users to apply for personal loans, car loans, or mortgages easily.

7. Notifications and Alerts

Real-time notifications and alerts for account activities, such as deposits, withdrawals, or unusual transactions, keep users informed. This feature helps in monitoring account security and managing finances effectively.

8. Integration with Digital Wallets and QR Payments

Mobile banking apps often integrate with digital wallets, enabling seamless cashless transactions. Features like QR code scanning for payments and contactless transactions promote a cashless and efficient banking experience.

Types of Mobile Banking Services:

1. Mobile Banking Applications (Banking Apps)

This is the most common type, where users download dedicated banking apps onto their smartphones. These apps provide a range of services like account management, fund transfers, bill payments, loan applications, and more. They are available for both Android and iOS devices, offering a seamless banking experience.

2. Mobile Web Banking

Mobile web banking allows users to access their bank accounts through a mobile browser, without needing to download an app. It is a more flexible option for users who may not have enough storage on their devices to install apps or prefer a browser interface. The services offered are similar to those of a mobile banking app, but the interface may vary.

3. USSD (Unstructured Supplementary Service Data) Mobile Banking

This service is used by people without internet access or smartphones. By dialing a specific code (such as *99# in India), users can access basic banking services such as balance inquiries, fund transfers, and bill payments. USSD services are available on any mobile phone, making them an ideal solution for financial inclusion in remote areas.

4. SMS Banking

SMS banking allows users to conduct basic banking activities by sending and receiving text messages. Services available via SMS banking include balance inquiries, mini statements, bill payments, and fund transfers. This service is suitable for users with basic feature phones or those in areas with limited internet connectivity.

5. Mobile Wallets (e-Wallets)

Mobile wallets are digital wallets stored on smartphones that allow users to store and manage their funds. These wallets enable customers to make payments, transfer money, and even store loyalty points or coupons. Some popular mobile wallet services in India include Paytm, PhonePe, and Google Pay, which also link to bank accounts for seamless transactions.

6. Mobile Payment Systems (NFC Payments)

Near-field communication (NFC)-based mobile payments allow users to make quick and secure transactions by simply tapping their smartphones at a point-of-sale terminal. Examples of NFC-based services include Google Pay, Apple Pay, and Samsung Pay. These services store payment card details securely and facilitate contactless payments.

7. Biometric Authentication for Mobile Banking

This service uses biometric features like fingerprints, facial recognition, or iris scanning to authenticate and authorize banking transactions on mobile devices. Biometric authentication adds an extra layer of security, ensuring that only authorized individuals can access and perform transactions on their accounts.

Advantages of Mobile Banking Services

1. Convenience and Accessibility

Mobile banking allows users to perform financial transactions anytime, anywhere. Whether it’s checking account balances, transferring funds, or paying bills, customers can manage their finances without visiting a branch. This 24/7 accessibility is a significant convenience for today’s fast-paced lifestyles.

2. Time-Saving

By eliminating the need to visit physical branches, mobile banking saves valuable time for customers. Tasks such as fund transfers, bill payments, or account updates can be completed within minutes through a mobile app, streamlining financial management.

3. Cost-Effectiveness

Mobile banking reduces the operational costs for banks by minimizing the reliance on physical branches and paper-based processes. For users, it eliminates transportation costs and reduces transaction fees compared to traditional banking methods, making it a cost-effective solution for all.

4. Enhanced Security

Mobile banking apps employ advanced security measures like encryption, biometric authentication, and multi-factor verification to ensure safe transactions. Real-time alerts and notifications keep users informed about account activities, further enhancing security and reducing the risk of fraud.

5. Wide Range of Services

Mobile banking provides a comprehensive range of services, including fund transfers, investment options, loan applications, and bill payments. Integration with digital wallets and QR code payment features enhances the usability and versatility of mobile banking platforms.

6. Financial Inclusion

Mobile banking extends financial services to remote and rural areas where physical bank branches may not be accessible. It promotes financial inclusion by enabling individuals in underserved areas to access essential banking services through their mobile devices.

Challenges of Mobile Banking Services:

1. Security Risks

Cybersecurity remains a major concern in mobile banking. Issues like phishing attacks, malware, and unauthorized access pose risks to user data and financial information. Despite robust security measures, users may still fall victim to fraud due to negligence or lack of awareness.

2. Limited Internet Connectivity

Mobile banking heavily depends on internet access, which may not be consistently available in remote or rural areas. Unstable connections or slow internet speeds can disrupt transactions, making the services less reliable in underdeveloped regions.

3. Digital Literacy and Awareness

A lack of digital literacy among certain demographics, particularly in rural or older populations, limits the adoption of mobile banking. Users unfamiliar with navigating mobile apps or understanding digital security protocols may be hesitant to use these services.

4. Compatibility issues

Not all mobile banking applications are optimized for all devices. Differences in operating systems, app versions, and hardware capabilities can create usability challenges, excluding certain users from accessing the services.

5. Service Downtime and Technical Glitches

Technical issues such as server outages, app crashes, or transaction failures can lead to frustration among users. Frequent downtime erodes trust in mobile banking services, pushing customers back toward traditional banking methods.

6. Regulatory and Compliance Challenges

Mobile banking must adhere to strict regulatory requirements, including data protection laws and financial compliance standards. Navigating these regulations can be complex for banks, especially when operating in multiple jurisdictions.

Payment Cards are part of a payment system issued by financial institutions, such as a bank, to a customer that enables its owner (the cardholder) to access the funds in the customer’s designated bank accounts, or through a credit account and make payments by electronic funds transfer and access automated teller machines (ATMs). Such cards are known by a variety of names including bank cards, ATM cards, MAC (money access cards), client cards, key cards or cash cards.

There are a number of types of payment cards, the most common being credit cards and debit cards. Most commonly, a payment card is electronically linked to an account or accounts belonging to the cardholder. These accounts may be deposit accounts or loan or credit accounts, and the card is a means of authenticating the cardholder. However, stored-value cards store money on the card itself and are not necessarily linked to an account at a financial institution.

It can also be a smart card that contains a unique card number and some security information such as an expiration date or CVVC (CVV) or with a magnetic strip on the back enabling various machines to read and access information. Depending on the issuing bank and the preferences of the client, this may allow the card to be used as an ATM card, enabling transactions at automatic teller machines; or as a debit card, linked to the client’s bank account and able to be used for making purchases at the point of sale; or as a credit card attached to a revolving credit line supplied by the bank.

Most payment cards, such as debit and credit cards can also function as ATM cards, although ATM-only cards are also available. Charge and proprietary cards cannot be used as ATM cards. The use of a credit card to withdraw cash at an ATM is treated differently to a POS transaction, usually attracting interest charges from the date of the cash withdrawal. Interbank networks allow the use of ATM cards at ATMs of private operators and financial institutions other than those of the institution that issued the cards.

All ATM machines, at a minimum, will permit cash withdrawals of customers of the machine’s owner (if a bank-operated machine) and for cards that are affiliated with any ATM network the machine is also affiliated. They will report the amount of the withdrawal and any fees charged by the machine on the receipt. Most banks and credit unions will permit routine account-related banking transactions at the bank’s own ATM, including deposits, checking the balance of an account, and transferring money between accounts. Some may provide additional services, such as selling postage stamps.

For other types of transactions through telephone or online banking, this may be performed with an ATM card without in-person authentication. This includes account balance inquiries, electronic bill payments, or in some cases, online purchases.

ATM cards can also be used on improvised ATMs such as “mini ATMs”, merchants’ card terminals that deliver ATM features without any cash drawer. These terminals can also be used as cashless scrip ATMs by cashing the receipts they issue at the merchant’s point of sale.

Card Networks

In some banking networks, the two functions of ATM cards and debit cards are combined into a single card, simply called a “debit card” or also commonly a “bank card”. These are able to perform banking tasks at ATMs and also make point-of-sale transactions, with both features using a PIN.

Canada’s Interac and Europe’s Maestro are examples of networks that link bank accounts with point-of-sale equipment.

Some debit card networks also started their lives as ATM card networks before evolving into full-fledged debit card networks, example of these networks are: Development Bank of Singapore (DBS)’s Network for Electronic Transfers (NETS) and Bank Central Asia (BCA)’s Debit BCA, both of them were later on adopted by other banks (with Prima Debit being the Prima interbank network version of Debit BCA).

Types

Payment cards have features in common, as well as distinguish features. Types of payment cards can be distinguished on the basis of the features of each type of card:

• Credit card

A credit card is linked to a line of credit (usually called a credit limit) created by the issuer of the credit card for the cardholder on which the cardholder can draw (i.e. borrow), either for payment to a merchant for a purchase or as a cash advance to the cardholder. Most credit cards are issued by or through local banks or credit unions, but some non-bank financial institutions also offer cards directly to the public.

The cardholder can either repay the full outstanding balance or a lesser amount by the payment due date. The amount paid cannot be less than the “minimum payment,” either a fixed dollar amount or a percentage of the outstanding balance. Interest is charged on the portion of the balance not paid off by the due date. The rate of interest and method of calculating the charge vary between credit cards, even for different types of card issued by the same company. Many credit cards can also be used to take cash advances through ATMs, which also attract interest charges, usually calculated from the date of cash withdrawal. Some merchants charge a fee for purchases by credit card, as they will be charged a fee by the card issuer.

• Debit card

With a debit card (also known as a bank card, check card or some other description) when a cardholder makes a purchase, funds are withdrawn directly either from the cardholder’s bank account, or from the remaining balance on the card, instead of the holder repaying the money at a later date. In some cases, the “cards” are designed exclusively for use on the Internet, and so there is no physical card.

The use of debit cards has become widespread in many countries and has overtaken use of cheques, and in some instances cash transactions, by volume. Like credit cards, debit cards are used widely for telephone and internet purchases.

Debit cards can also allow instant withdrawal of cash, acting as the ATM card, and as a cheque guarantee card. Merchants can also offer “cashback”/”cashout” facilities to customers, where a customer can withdraw cash along with their purchase. Merchants usually do not charge a fee for purchases by debit card.

• Charge card

With charge cards, the cardholder is required to pay the full balance shown on the statement, which is usually issued monthly, by the payment due date. It is a form of short-term loan to cover the cardholder’s purchases, from the date of the purchase and the payment due date, which may typically be up to 55 days. Interest is usually not charged on charge cards and there is usually no limit on the total amount that may be charged. If payment is not made in full, this may result in a late payment fee, the possible restriction of future transactions, and perhaps the cancellation of the card.

• ATM Card

An ATM card (known under a number of names) is any card that can be used in automated teller machines (ATMs) for transactions such as deposits, cash withdrawals, obtaining account information, and other types of transactions, often through interbank networks. Cards may be issued solely to access ATMs, and most debit or credit cards may also be used at ATMs, but charge and proprietary cards cannot.

The use of a credit card to withdraw cash at an ATM is treated differently to an POS transaction, usually attracting interest charges from the date of the cash withdrawal. The use of a debit card usually does not attract interest. Third party ATM owners may charge a fee for the use of their ATM.

• Stored-Value card

With a stored-value card, a monetary value is stored on the card, and not in an externally recorded account. This differs from prepaid cards where money is on deposit with the issuer similar to a debit card. One major difference between stored value cards and prepaid debit cards is that prepaid debit cards are usually issued in the name of individual account holders, while stored-value cards are usually anonymous.

The term stored-value card means that the funds and or data are physically stored on the card. With prepaid cards the data is maintained on computers controlled by the card issuer. The value stored on the card can be accessed using a magnetic stripe embedded in the card, on which the card number is encoded; using radio-frequency identification (RFID); or by entering a code number, printed on the card, into a telephone or other numeric keypad.

• Fleet card

Fleet card is used as a payment card, most commonly for gasoline, diesel and other fuels at gas stations. Fleet cards can also be used to pay for vehicle maintenance and expenses, at the discretion of the fleet owner or manager. The use of a fleet card reduces the need to carry cash, thus increasing the security for fleet drivers. The elimination of cash also helps to prevent fraudulent transactions at the fleet owner’s or manager’s expense.

Fleet cards provide convenient and comprehensive reporting, enabling fleet owners/managers to receive real time reports and set purchase controls with their cards, helping to keep them informed of all business related expenses. They may also reduce administrative work or otherwise be essential in arranging fuel taxation refunds.

Other Cards

• Gift card
• Digital currency
• Store card

Technologies

A number of International Organization for Standardization standards, ISO/IEC 7810, ISO/IEC 7811, ISO/IEC 7812, ISO/IEC 7813, ISO 8583, and ISO/IEC 4909, define the physical properties of payment cards, including size, flexibility, location of the magstripe, magnetic characteristics, and data formats. They also provide the standards for financial cards, including the allocation of card number ranges to different card issuing institutions.

• Embossing

Originally charge account identification was paper-based. In 1959 American Express was the first charge card operator to issue embossed plastic cards which enabled cards to be manually imprinted for processing, making processing faster and reducing transcription errors. Other credit card issuers followed suit. The information typically embossed are the bank card number, card expiry date and cardholder’s name. Though the imprinting method has been predominantly superseded by the magnetic stripe and then by the integrated chip, cards continue to be embossed in case a transaction needs to be processed manually. Under manual processing, cardholder verification was by the cardholder signing the payment voucher after which the merchant would check the signature against the cardholder’s signature on the back of the card. Cards conform to the ISO/IEC 7810 ID-1 standard, ISO/IEC 7811 on embossing, and the ISO/IEC 7812 card numbering standard.

• Magnetic stripe

Magnetic stripes started to be rolled out on debit cards in the 1970s with the introduction of ATMs. The magnetic stripe stores card data which can be read by physical contact and swiping past a reading head. The magnetic stripe contains all the information appearing on the card face, but allows for faster processing at point-of-sale than the then manual alternative as well as subsequently by the transaction processing company. When the magnetic stripe is being used, the cardholder will have been issued with a PIN, which is used for cardholder identification at the point-of-sale, and a signature is no longer required. The magnetic stripe is in the process of being augmented by the integrated chip.

• Smart card

A smart card, chip card, or integrated circuit card (ICC), is any pocket-sized card with embedded integrated circuits which can process data. This implies that it can receive input which is processed by way of the ICC applications and delivered as an output. There are two broad categories of ICCs. Memory cards contain only non-volatile memory storage components, and perhaps some specific security logic. Microprocessor cards contain volatile memory and microprocessor components. The card is made of plastic, generally PVC, but sometimes ABS. The card may embed a hologram to avoid counterfeiting. Using smart cards is also a form of strong security authentication for single sign-on within large companies and organizations.

EMV is the standard adopted by all major issuers of smart payment cards.

• Proximity card

Proximity card (or prox card) is a generic name for contactless integrated circuit devices used for security access or payment systems. It can refer to the older 125 kHz devices or the newer 13.56 MHz contactless RFID cards, most commonly known as contactless smartcards.

Modern proximity cards are covered by the ISO/IEC 14443 (proximity card) standard. There is also a related ISO/IEC 15693 (vicinity card) standard. Proximity cards are powered by resonant energy transfer and have a range of 0–3 inches in most instances. The user will usually be able to leave the card inside a wallet or purse. The price of the cards is also low, usually US$2–$5, allowing them to be used in applications such as identification cards, keycards, payment cards and public transit fare cards.

New Technology in Banking refers to the innovative digital solutions transforming financial services. It includes Artificial Intelligence (AI), Blockchain, Cloud Computing, Biometric Authentication, and Internet of Things (IoT) to enhance security, efficiency, and customer experience. These technologies enable Faster transactions, Real-time analytics, Fraud prevention, and Automation. By integrating advanced digital tools, banks improve financial accessibility, reduce operational costs, and offer seamless banking services globally.

New Technology in Banking:

• Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML are transforming banking by enhancing customer service, fraud detection, and risk assessment. Chatbots powered by AI provide 24/7 customer support, while ML algorithms analyze spending patterns to detect fraudulent transactions. AI also helps banks with loan approvals, credit scoring, and personalized financial recommendations. By automating processes, AI reduces operational costs and improves decision-making. Banks are increasingly investing in AI to enhance efficiency and provide data-driven insights for better financial management.

• Blockchain Technology

Blockchain offers secure, transparent, and decentralized banking transactions. It eliminates intermediaries, making cross-border payments faster and cheaper. Smart contracts enable automated and tamper-proof agreements, reducing fraud risks. Blockchain also enhances data security by preventing unauthorized access or alterations. Many banks are integrating blockchain for digital identity verification, trade finance, and secure lending. This technology is reshaping the financial sector by ensuring trust, transparency, and efficiency in banking transactions.

• Cloud Computing

Cloud technology enables banks to store and process vast amounts of data efficiently. It reduces the need for physical servers, cutting operational costs. Cloud-based banking solutions improve data accessibility, security, and scalability. Banks can deploy real-time analytics, AI-driven insights, and mobile banking services on the cloud. Cloud computing also supports disaster recovery plans, ensuring uninterrupted services. As digital banking grows, cloud adoption is becoming essential for cost-effective and secure banking solutions.

• Biometric Authentication

Biometric technology enhances banking security by using fingerprints, facial recognition, iris scans, and voice recognition for authentication. It eliminates the need for traditional passwords and PINs, reducing the risk of fraud. Many banks now use biometrics for ATM withdrawals, mobile banking logins, and customer verification. This technology ensures a seamless and secure banking experience while protecting customer data. With increasing cybersecurity threats, biometric authentication is becoming a standard feature in digital banking.

• Robotic Process Automation (RPA)

RPA automates repetitive banking tasks such as account opening, loan processing, and compliance reporting. It enhances efficiency, reduces errors, and minimizes costs. Banks use RPA for fraud detection, transaction monitoring, and customer service automation. By streamlining back-office operations, RPA allows human employees to focus on complex decision-making. This technology is improving productivity and operational accuracy, making banking services faster and more reliable.

• Internet of Things (IoT) in Banking

IoT connects physical devices to the internet, enabling smart banking solutions. Banks use IoT for smart ATMs, real-time asset tracking, and enhanced customer engagement. IoT-powered wearables, such as smartwatches and payment rings, allow seamless transactions without traditional banking cards. Banks also use IoT to analyze customer behavior and offer personalized banking services. By integrating IoT, financial institutions improve security, efficiency, and customer experience.

• Quantum Computing

Quantum computing has the potential to revolutionize banking security, risk management, and financial modeling. It can process complex data at incredible speeds, improving fraud detection and real-time market analysis. Banks are exploring quantum computing for portfolio optimization, cryptographic security, and advanced simulations. Though still in its early stages, quantum technology promises to reshape financial services with ultra-fast computing power and enhanced data encryption.

• 5G Technology in Banking

5G technology enhances mobile banking, digital payments, and real-time transaction processing. With ultra-fast internet speeds, customers can experience seamless banking services with minimal delays. 5G also enables enhanced cybersecurity by supporting advanced encryption and faster fraud detection. Banks can leverage 5G to provide immersive banking experiences through augmented reality (AR) and virtual reality (VR) applications. This technology is set to redefine banking convenience and security.

Online banking, also known as internet banking or web banking, is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution’s website. The online banking system will typically connect to or be part of the core banking system operated by a bank and is in contrast to branch banking which was the traditional way customers accessed banking services.

Some banks operate as a “direct bank” (or “virtual bank”), where they rely completely on internet banking.

Internet banking software provides personal and corporate banking services offering features such as viewing account balances, obtaining statements, checking recent transactions, transferring money between accounts, and making payments.

Internet banking is the system that provides the facility to the customer to conduct the financial and non-financial transactions from his net banking account. The user can transfer funds from his account to other accounts of the same bank/different bank using a website or an online application. The customer uses a resource and a medium to conduct financial transactions. The resource that a customer uses might be an electronic device like a computer, a laptop, or a mobile phone. The internet is the medium that makes the technology possible.

Features of Internet Banking:

The customer using this facility can conduct transactional and non-transactional tasks including:

• The customer can view account statements.
• The customer can check the history of the transactions for a given period by the concerned bank.
• Bank, statements, various types of forms, applications can be downloaded.
• The customer can transfer funds, pay any kind of bill, recharge mobiles, DTH connections, etc.
• The customer can buy and sell on e-commerce platforms.
• The customer can invest and conduct trade.
• The customer can book transport, travel packages, and medical packages.
• The list of benefits a user can enjoy using internet banking is too lengthy, to sum up.

Advantages of Internet Banking

• The customers get permanent access to his/her bank anytime and anywhere.
• Transactions are safe and highly secure.
• Immediate funds transfer helps the user in time of urgent need.
• It saves valuable time of the users.

Security of Internet Banking

The financial information of a customer is important. This is the reason a customer trusts financial institutions. The financial institutions keep it on a high priority that the security of customers’ accounts shouldn’t face a breach. The financial institutions are using two types of security methods to make internet banking safe and secure:

Use of PIN/TANs: Under this system, a PIN is used to login and TANs are used to conduct transactions. TANs are one time passwords. TAN is sent to the customer via SMS on registered mobile number that corresponds with the login user id. It is valid for a short time frame.

Internet banking is conducted using web browsers with SSL enabled websites, so encryption is not an important issue. It also uses signature verification as a base. Under this method, the transactions done by the customer are signed and encrypted digitally. The smart cards or any other memory storable medium can be used to store keys for signature generation and encryption.

E-Banking

The facility of e-banking provided by the banks to their customers uses the internet as a medium. The services under this facility include funds transfer, payment of bills, opening bank accounts online, and much more.

There are mainly two methods to deliver e-banking to the customers:

• Banks with physical presence offering electronic transaction
• Virtual banks offering transaction services

Most of the banks have a physical presence and offer banking facility online. But, there are some banks that don’t have any physical presence anywhere. They are virtual banks.

Features of e-Banking

1. ATMs

ATM is shot form of Automated Teller Machines. These machines are actually electronic terminals which provide the customers to bank anytime. The ATM machines take inputs from the ATM that the banks provide to its customers. To make use of ATM, the user must have a password. Banks charge a nominal fee from the customers on every transaction made after crossing the specified limit of free transactions, if the transaction is done from any other bank’s ATM machine.

2. Deposit and Withdraws (Direct)

This service under e-banking offers the customer a facility to approve paycheques regularly to the account. The customer can give the bank an authority to deduct funds from his/her account to pay bills, instalments of any kind, insurance payments, and many more.

3. Pay by Phone Systems

This service allows the customer to contact his/her bank to request them for any bill payment or to transfer funds to some other account.

4. Point-of-Sale Transfer Terminals

This service allows customers to pay for purchase through a debit/credit card instantly.

Forms of e-Banking

• Internet Banking: The customer uses electronic devices like computer or mobile to conduct transactions using the internet.
• ATM Machines: The customers can withdraw cash, deposit cash, transfer funds using ATMs.
• E-cheque: The customer can transfer money using PayPal or other e-service providers.

An Automated Teller Machine (ATM) remains an essential tool for financial transactions, enabling cash withdrawals, deposits, fund transfers, and more. In 2024, the landscape of ATM technology continues to evolve, driven by consumer needs and advancements in technology.

Types of ATMs:

ATMs are classified into several types based on their functionalities, location, and ownership. Below are the main types of ATMs:

1. On-Site ATMs

• Installed within or near bank premises.
• Allows banks to provide 24/7 service to customers.
• Accessible for cash withdrawals, deposits, and other banking activities.

2. Off-Site ATMs

• Located away from bank branches, in areas like malls, airports, or standalone kiosks.
• Offers convenience to customers in remote or high-traffic areas.

3. White-Label ATMs

• Owned and operated by non-banking entities authorized by the RBI in India.
• Do not display any bank logo but allow transactions from any bank account.

4. Brown-Label ATMs

• Owned by third-party service providers but branded and managed by banks.
• Banks handle cash management and transaction processing.

5. Green-Label ATMs

• Specifically used for agricultural transactions.
• Designed to cater to rural banking needs.

6. Orange-Label ATMs

• Dedicated to providing financial services for securities-related transactions.

7. Yellow-Label ATMs

• Designed for e-commerce transactions.
• Allows users to make payments for online purchases.

8. Pink-Label ATMs

• Dedicated for female users, ensuring a safe and secure environment.

9. Biometric ATMs

• Operated using biometric authentication such as fingerprints or iris scans.
• Ensures secure access, especially for illiterate or semi-literate users.

10. Mobile ATMs

• Vans equipped with ATM machines, serving rural or underserved areas.
• Deployed during emergencies or special events.

11. Cash Recycling Machines (CRMs)

• Allow both cash withdrawal and deposit.
• Recycle deposited cash for subsequent withdrawals, improving efficiency.

12. Mini ATMs

• Smaller versions used in rural areas with limited financial infrastructure.
• Often operated by Business Correspondents or Microfinance Institutions.

Components:

• Card reader:

This part reads the chip on the front of the card or the magnetic stripe on the back of the card.

• Keypad:

The keypad is used by the customer to input information, including personal identification number (PIN), the type of transaction required, and the amount of the transaction.

• Cash dispenser:

Bills are dispensed through a slot in the machine, which is connected to a safe at the bottom of the machine.

• Printer:

If required, consumers can request receipts that are printed here. The receipt records the type of transaction, the amount, and the account balance.

• Screen:

ATM issues prompts that guide the consumer through the process of executing the transaction. Information is also transmitted on the screen, such as account information and balances.

Future of ATM’s in India:

The future of ATMs in India is poised for transformation, aligning with the digital banking revolution while maintaining their role as a vital financial access point. With cash usage declining in urban areas due to the growth of digital payment systems like UPI, ATMs are adapting to remain relevant. Innovations such as biometric authentication, QR code-based withdrawals, and contactless transactions enhance security and convenience. Additionally, ATMs are evolving into multi-functional kiosks, offering bill payments, financial advice, and government service access alongside traditional banking.

In rural and semi-urban areas, ATMs will continue to be indispensable, bridging the financial inclusion gap where digital infrastructure is limited. Initiatives like white-label ATMs and mobile ATMs ensure access to banking services in underserved regions. Furthermore, cash recycling machines (CRMs) and green ATMs are being deployed to optimize cash management and promote eco-friendly banking practices.

Technological advancements, including AI-driven fraud detection and real-time monitoring, will address security concerns. As digital literacy improves, future ATMs are expected to integrate with omnichannel banking platforms, offering a seamless user experience across digital and physical channels. Although digital payments are growing, ATMs in India will remain a hybrid solution, adapting to the evolving needs of both tech-savvy and cash-dependent populations.

Real-time gross settlement (RTGS) systems are specialist funds transfer systems where the transfer of money or securities takes place from one bank to any other bank on a “real-time” and on a “gross” basis. Settlement in “real time” means a payment transaction is not subjected to any waiting period, with transactions being settled as soon as they are processed. “Gross settlement” means the transaction is settled on a one-to-one basis, without bundling or netting with any other transaction. “Settlement” means that once processed, payments are final and irrevocable.

RTGS or the full form Real Time Gross Settlement is a fund transfer method which is done on a real-time basis and without any delays. This wire transfer method allows the money sent by the remitter to immediately reach the beneficiary/payee as and when the request is received. The full form of RTGS includes Gross Settlement which means transactions are carried out on an individual basis and not in a batch-wise system.

It is one of the fastest interbank money transfer method available through banking channels in India. RTGS transactions require the beneficiary bank to credit the recipient’s account within 30 minutes of receiving the funds’ transfer message.

When money is transferred using RTGS, one needs the following information:

• The amount that needs to be transferred
• Name of the beneficiary/payee
• Name of the bank of the beneficiary/payee
• IFSC code of the payee/beneficiary
• Account number of the payee/beneficiary

The RTGS payment method is maintained by the Reserve Bank of India and is, therefore, one of the popular and secure methods of transferring funds.

How to do RTGS? – Step-wise guide to RTGS Process

In order to transfer money through RTGS, you must first add a beneficiary. Thereafter, you can make a funds transfer.

The steps to add a beneficiary to your account are:

Step1: Log into your respective bank’s netbanking account by entering the username and password.

Step2: Go to Funds Transfer tab.

Step3: Select “Add a beneficiary” and then click on “Select Beneficiary Type” to select “Transfer to Another Bank”.

Step4: Enter the beneficiary account details including name, bank name, IFSC code and account number.

Step5: Enter the beneficiary account details including name, bank name, IFSC code and account number.

Step6: Click on “Add” and confirm.

Step7: Wait for the confirmation message.

Once you add the beneficiary, follow these simple steps to transfer money using RTGS.

Step-1: Go to the Funds Transfer tab after logging to your Netbanking account.

Step-2: Select RTGS option and then choose the beneficiary/payee you wish to send the money.

Step-3: Add the amount that is to be transferred.

Step-4: Review all the documents before submission of the request. The funds will be credited within 30 minutes of the request.

Benefits of RTGS

RTGS is a popular fund transfer method in India and comes with a host of benefits. The benefits of using RTGS as your method of transferring funds are:

• Safe and secure: As RTGS is maintained by the Reserve Bank of India, it is a risk-free method of funds.
• Speed: Since transactions are carried out on a real-time basis, there is no room for delay.
• Wider boundaries: There are no geographical limitations in India to use RTGS.
• Convenient: Transfer of funds from your home or office.

RTGS systems are usually operated by a country’s central bank as it is seen as a critical infrastructure for a country’s economy. Economists believe that an efficient national payment system reduces the cost of exchanging goods and services, and is indispensable to the functioning of the interbank, money, and capital markets. A weak payment system may severely drag on the stability and developmental capacity of a national economy; its failures can result in inefficient use of financial resources, inequitable risk-sharing among agents, actual losses for participants, and loss of confidence in the financial system and in the very use of money.

RTGS system does not require any physical exchange of money; the central bank makes adjustments in the electronic accounts of Bank A and Bank B, reducing the balance in Bank A’s account by the amount in question and increasing the balance of Bank B’s account by the same amount. The RTGS system is suited for low-volume, high-value transactions. It lowers settlement risk, besides giving an accurate picture of an institution’s account at any point of time. The objective of RTGS systems by central banks throughout the world is to minimize risk in high-value electronic payment settlement systems. In an RTGS system, transactions are settled across accounts held at a central bank on a continuous gross basis. The settlement is immediate, final, and irrevocable. Credit risks due to settlement lags are eliminated. The best RTGS national payment system cover up to 95% of high-value transactions within the national monetary market.

RTGS systems are an alternative to systems of settling transactions at the end of the day, also known as the net settlement system, such as the BACS system in the United Kingdom. In a net settlement system, all the inter-institution transactions during the day are accumulated, and at the end of the day, the central bank adjusts the accounts of the institutions by the net amounts of these transactions.

World Bank has been paying increasing attention to payment system development as a key component of the financial infrastructure of a country, and has provided various forms of assistance to over 100 countries. Most of the RTGS systems in place are secure and have been designed around international standards and best practices.

There are several reasons for central banks to adopt RTGS. First, a decision to adopt is influenced by competitive pressure from the global financial markets. Second, it is more beneficial to adopt an RTGS system for central bank when this allows access to a broad system of other countries’ RTGS systems. Third, it is very likely that the knowledge acquired through experiences with RTGS systems spills over to other central banks and helps them make their adoption decision. Fourth, central banks do not necessarily have to install and develop RTGS themselves. The possibility of sharing development with providers that have built RTGS systems in more than one country (CGI of UK holding the IP, CMA Small System of Sweden, JV Perago of South Africa, SIA S.p.A. of Italy and Montran of USA) has presumably lowered the cost and hence made it feasible for many countries to adopt.

National Electronic Funds Transfer (NEFT) is a nationwide payment system enabling the electronic transfer of funds from one bank account to another. It is a secure, efficient, and widely-used platform managed by the Reserve Bank of India (RBI). NEFT functions on a batch processing system, allowing individuals and businesses to transfer funds in near-real-time. Transfers can be initiated online via internet banking, mobile apps, or physically at bank branches. Transactions are settled on an hourly basis during operational hours, ensuring reliability and speed. NEFT supports a wide range of payments, including interbank transfers, credit to loan accounts, and inward remittances.

Origin of NEFT in India:

Introduced by the Reserve Bank of India in 2005, NEFT replaced the earlier Special Electronic Funds Transfer (SEFT) system, providing a more accessible and robust alternative. Its design aimed to promote a cashless economy and strengthen interbank fund transfers across urban and rural regions. Over time, NEFT has undergone significant upgrades, including 24×7 availability since December 2019, reflecting the RBI’s push towards digital financial inclusivity. This milestone allowed real-time fund transfers at any time, contributing to its widespread adoption across individuals, businesses, and government organizations. NEFT has become a cornerstone in India’s move towards a digitally empowered financial system.

NEFT Process:

NEFT (National Electronic Funds Transfer) process facilitates the transfer of funds electronically between banks in India.

1. Initiation of Transaction:

The sender provides details such as the beneficiary’s name, account number, bank name, branch, and IFSC (Indian Financial System Code). Transactions can be initiated via online banking, mobile banking apps, or at a bank branch.

2. Sender’s Bank Processing:

The sender’s bank verifies the details and forwards the transaction request to its NEFT Service Centre.

3. Central Processing by RBI:

NEFT Service Centre bundles multiple transactions into batches and forwards them to the Reserve Bank of India (RBI), the clearing and settlement authority. RBI processes the transactions in hourly settlement batches during operational hours.

4. Clearing and Settlement:

The RBI routes the payment instructions to the beneficiary’s bank. Settlements are carried out in real-time gross settlement mode within the hourly batch.

5. Beneficiary Bank’s Role:

The beneficiary’s bank credits the funds to the recipient’s account upon receiving instructions from the RBI.

6. Confirmation:

Both the sender and beneficiary are notified of the transaction’s success or failure through SMS, email, or banking alerts.

NEFT Timings:

NEFT works on a deferred settlement basis which means the transactions are carried out in batches. Earlier, NEFT transactions were available from 8:00 AM to 6:30 PM from Monday to Friday only. However, RBI has regularised that NEFT transactions will be available 24*7 on all days of the year, including holidays.

Also, after usual banking hours, NEFT transactions are expected to be automated transactions initiated using ‘Straight Through Processing (STP)’ modes by the banks.

How to Transfer Funds through NEFT?

Online Transfer through Internet or Mobile Banking

• Login to Your Bank Account:

Access your account using the bank’s internet or mobile banking platform.

• Add Beneficiary:

Go to the “Add Beneficiary” or “Payee” section. Provide the beneficiary’s details such as name, account number, bank name, branch, and IFSC code.

• Beneficiary Approval:

Once added, the bank may take a few minutes to several hours to verify and approve the beneficiary.

• Initiate Transfer:

Navigate to the fund transfer section and select NEFT. Choose the beneficiary and enter the transfer amount and any remarks if required.

• Review and Authenticate:

Review the entered details carefully. Authenticate the transaction using the provided OTP or transaction password.

• Receive Confirmation:

Post successful transfer, a confirmation message will be displayed or sent via SMS/email.

Offline Transfer at Bank Branch

• Visit the Bank Branch:

Go to your bank branch and request an NEFT application form.

• Fill the Form:

Provide the beneficiary details such as name, account number, bank name, branch, IFSC, and the amount to be transferred.

• Submit the Form:

Hand over the form along with the transfer amount if not debiting directly from your account.

• Processing by the Bank:

The bank will process the NEFT request and initiate the transfer in the next available batch.

• Confirmation:

Collect the receipt and check for updates regarding the transfer’s success.

Charges applicable to NEFT:

1. Online NEFT Transactions (via Internet or Mobile Banking):

• No Charges:

As per the Reserve Bank of India (RBI) directive issued in January 2020, there are no charges for NEFT transactions made through internet banking or mobile banking platforms.

2. Offline NEFT Transactions (at Bank Branches):

Banks may levy charges for NEFT requests processed in physical mode (at branches). These charges are set within the limits prescribed by the RBI and vary slightly across banks.
Below is an indicative structure:

• Up to ₹10,000: ₹2.50 + GST.
• ₹10,001 to ₹1 Lakh: ₹5.00 + GST.
• ₹1,00,001 to ₹2 Lakhs: ₹15.00 + GST.
• Above ₹2 Lakhs: ₹25.00 + GST.

Special Cases:

• Priority Customers: Premium account holders may enjoy fee waivers, depending on the bank’s policy.
• Government Mandates: Certain beneficiary payments, such as those linked to government schemes, are NEFT-free.

Benefits of using NEFT:

1. Convenient and Accessible:

NEFT allows seamless transfer of funds from one bank account to another across India. It can be accessed both online (via internet or mobile banking) and offline (at bank branches), making it suitable for a wide range of users, including those without internet access.

2. Secure and Reliable:

NEFT transactions are regulated by the Reserve Bank of India (RBI), ensuring a high level of security. Each transaction is processed in encrypted batches, reducing risks and ensuring reliability.

3. Cost-Effective:

NEFT is economical, especially for online transactions where banks levy no charges. Even offline transactions at branches are affordable, making it an attractive choice for individuals and businesses alike.

4. No Transaction Limit:

While individual banks may impose their own restrictions, NEFT has no minimum or maximum transaction limit set by the RBI, making it ideal for both small and large fund transfers.

5. Nationwide Coverage:

NEFT is widely supported across India by most banks and branches. This vast network ensures easy fund transfers, regardless of geographic location.

6. Scheduled and Recurring Payments:

With NEFT, users can schedule future payments or set up standing instructions for recurring transactions, such as EMI payments, making financial planning simpler and hassle-free.