Basics explained: How money moves online

Basics explained: How money moves online



Dear Investor,


Internet banking is fairly new to India.


It is catching up with most banks expanding the services they offer for banking on the internet or the mobile phone.

You may have heard of or even transferred funds yourself through the NEFT payment systems. Here are four other cool ways to transfer money or even cash online:

1. Transfer Funds through RTGS system:

RTGS stands for Real Time Gross Settlement. It is quite similar to the NEFT or National Electronic Fund Transfer system. However, the key difference is how long a transaction takes to be completed. As the name suggests, in the RTGS system, transactions are processed and settled continuously in real time. In the NEFT system, payments are deferred. They are processed on an hourly basis when conducted during operable hours. An RTGS transaction will be processed almost immediately between 9.15 am and 4.15 pm on weekdays, and between 9.15 am and 1.45 pm on Saturdays.

The catch is that RTGS payments have higher transaction fees. For example, ICICI Bank charges between Rs 2.5 and Rs 25 excluding the service tax for transferring amounts up to Rs 10 lakh through NEFT. In contrast, it charges Rs 25 for transferring Rs 2-5 lakh and Rs 50 for amounts between Rs 5 and 10 lakh through the RTGS system. The RBI has also stipulated that an RTGS transaction should have a minimum value of Rs 2 lakh. This is not so for NEFT.

2. Transfer Funds through IMPS using Mobile Number and MMID

The key requirement for sending money through RTGS or NEFT payment systems is to add the payee’s details. This often takes an entire day to process. If you do not want to wait, and instead would want to send the money immediately, the Immediate Payment Service (IMPS) is for you. As many as 60 banks offer this service, according to the National Payments Corporation of India.

The IMPS system is available on both the phone and the computer, but is predominantly used by those opting for mobile banking services. The key requirement for an IMPS transaction is not your bank account number, but your mobile number. You will need to register your mobile number and generate your MMID. The Mobile Money Identifier (MMID) is a 7 digit code issued by a participating bank to their customer registered for mobile banking. Every account will have a unique MMID. This ensures its identification and security.

So, to transfer money, both the sender and receiver need to generate their MMID. Then, you can log on to your bank’s internet or mobile banking portal, and click on fund transfer via IMPS. Enter details of the mobile number, the MMID and the transaction amount. Then, punch in your transaction passwords and debit card details to verify the transaction. That’s it. You are now done. The best part? This can be done 24x7 unlike NEFT and RTGS transactions.

Banks may charge a small amount between Rs 2.5 and 15 for such transactions. This is excluding the service tax.

3. Transfer Funds through IMPS using Account Number and IFSC Code

The IMPS system needs both the recipient and sender to register their mobile numbers and generate the MMID. But what if the recipient is not registered or may be has no valid mobile number?

To help such customers, an IMPS transaction can also be conducted using the recipient’s bank account number and IFSC Code. The Indian Financial System Code (IFSC) is a unique code that helps identify which bank the account belongs to and the branch details. Once this is identified, the payment is directly transferred to the bank account. This can also be done 24x7. The bank charges may be the same as an IMPS transfer using mobile number and MMID.

4. Send money through SMS

The above three transfer systems helps credit money into the bank account. What if you want to send money to someone in cash-form? You can now do that through the SMS banking facility offered by many banks.

For such a cash-based transaction, the recipient does not need to have any bank account. All he or she needs is a mobile number. The beneficiary will have to go to an ATM of your bank and withdraw cash using the details received through SMS. There is no need for an ATM card. Simply put, you are giving the recipient a one-time opportunity to withdraw cash from account without using your ATM card. However, you will be specifying the exact amount of withdrawal, thus increasing the security. Once the recipient successfully punches in your mobile number, the two sets of codes given to the sender and the recipient as well as the correct amount, he or she will be able to successfully withdraw cash.





Happy Learning