Why Do People Use Net Banking for Transactions?

While online fund transfer methods like NEFT (National Electronic Funds Transfer) and RTGS (Real Time Gross Settlement) have their advantages, many people still prefer to use net banking for their transactions. This preference can be understood by exploring the basic features of NEFT and RTGS, as well as the convenience and accessibility offered by net banking.

Understanding NEFT and RTGS

NEFT and RTGS are digital payment systems managed by the Reserve Bank of India (RBI), designed to facilitate electronic fund transfers between banks and their customers. Let's explore the basic features and differences between these two systems:

RTGS: Real Time Gross Settlement

RTGS is an instantaneous settlement system, primarily used for high-value transactions. It is reserved for corporates and those who require large transactions, with a minimum transaction value of Rs. 2 lakh. This system offers 24/5 working hours but is not available 24/7. Mobile wallets and other non-banking platforms like MobiKwik and Paytm cannot use RTGS for transactions. RTGS transactions typically settle within minutes, making it ideal for significant financial operations.

NEFT: National Electronic Fund Transfer

NEFT, on the other hand, is designed for bank-to-bank transactions, but not for individual-to-individual transactions. It settles net amounts between banks at intervals of 30 minutes. For example, if SBI customers withdraw a total sum of Rs 5 lakh from an Axis Bank ATM, and Axis Bank customers withdraw Rs. 2 lakh from an SBI ATM, SBI has to pay Rs. 3 lakh to Axis Bank through NEFT. This system is perfect for handling lower-value transactions on a large scale. However, NEFT transactions are not available on the reverse transactions among individuals, which limits its usage for everyday banking needs.

Why People Choose Net Banking

Despite the advancements in NEFT and RTGS, net banking remains the preferred method for many users due to several advantages:

Convenience and Accessibility: Net banking allows users to transfer funds 24/7 from the comfort of their homes, eliminating the need to visit a bank branch or use ATMs. This convenience is particularly appealing in today's digital age. Availability of Digital Payment Apps: With the introduction of digital payment apps based on Immediate Payment Systems (IMPS) and Unified Payments Interface (UPI), users can easily transfer money using various apps such as SBi Yono, Axis Pay, and NPCI's BHIM. These apps provide 24x7 service, allowing users to manage their finances round the clock. Low Value and Flexibility: For small and frequent transactions, these digital payment apps are more suitable. IMPS allows transactions starting from ?1 to a maximum of ?2 lakh, which is ideal for everyday personal and business transactions. Security: Net banking and digital payment apps often offer more security features compared to traditional bank transactions. Features like two-factor authentication and facial recognition add an extra layer of protection, giving users peace of mind. Cost-Effective: These digital platforms are generally more cost-effective, with lower transaction fees compared to traditional banking methods. This cost-effectiveness is a significant factor in the widespread adoption of net banking and digital payment systems.

Examples of Digital Payment Apps Based on IMPS and UPI

Different banks and financial institutions offer their own digital payment solutions based on IMPS and UPI. Here are some examples:

SBI Yono: A mobile banking application by State Bank of India that allows users to perform financial transactions. Axis Pay: A digital wallet service by Axis Bank, enabling users to transact online and offline. UBI BHIM by NPCI: A leading digital payment app that offers a wide range of financial services.

The widespread accessibility and ease of use of these apps have significantly contributed to the growth of digital payments in India. Whether you are a small business owner, an individual money manager, or a corporation, choosing to use net banking and digital payment apps can enhance your financial management and transaction efficiency.

Conclusion

While NEFT and RTGS offer specific advantages for high-value and institutional transactions, net banking and digital payment apps are the preferred choice for the majority of users due to their convenience, accessibility, and flexibility. As technology continues to advance, the landscape of financial transactions is likely to evolve, further cementing the role of digital payment solutions in the modern economy.