Modern Options For Financial Transactions

Lead:

Currency plays a vital role in financial transactions.  The currency started with a barter exchange system.  A lot of variations of it can be seen today.  This article gives information about various types.

Every business person must be aware of the current and future tools available for financial transactions.  The businessman himself has to use a few options while repaying his loans; also, the businessman can receive amounts through these options from people who are giving him money.  A business person may face problems if he is not aware of these options.  So, a business person should have detailed knowledge of all possibilities when he is giving money or receiving it.

Debit/Credit card

Debit card

The bank, where we are holding an account, gives us a debit card.  The most important thing about the debit card is that it is linked with our account.  It means that the bank, where we hold an account can only issue us a debit card.  We can use the debit card to withdraw money from the ATM.  We can also use it for many reasons like to make purchases, pay hotel bills, fill petrol.  For this, the shopkeeper or the person concerned will swipe the debit card on his small machine called ‘Point of Sale (PoS)’ and enter the amount to be transacted.  Then we will begin type our secret ‘PIN’ on the keyboard of the machine, and then the transaction will be completed.  The money will be debited directly from our bank.     

In recent times for security purposes, the Reserve Bank of India has made it compulsory for the banks to make changes to debit cards.  The move involves a ‘chip’ in the debit card, which can make wireless communication with the PoS machine.  There is no need now to swipe the debit card in the PoS machine; it is sufficient just to take the debit card near the device.  The wireless communication between them completes the transaction.  There is no need even to enter the PIN in this case.  It means our transaction can be easier and faster.  Without typing the PIN, this transaction can be insecure.  It means if the debit card is in someone else’s hand, he can use it easily.  Considering this, the Reserve Bank of India has put a limit on such types of transactions. Transactions taking place with the wireless method and without PIN are limited to Rs. 2000 only.  If anyone tries to use this debit card, he cannot exceed the transacting limit.  

Do not share your PIN with anyone, also do not write it in your purse or wallet.  Some people have a habit of writing the PIN with a specific pen on the rear of the debit card.  Do not ever do that.  While making a transaction enter your PIN by yourself.  Do not tell anyone else to enter it.

Keep your debit card with yourself or keep it in a safe place in your home.  The information like card number, validity date, three-digit Card Verification Code (CVV) number is also to be kept a secret.  So, no one else other than family members can use the debit card.  For a few seconds, the shopkeeper will have the card with him, but there is no alternative to this.

It has been mentioned that we can withdraw money from the ATM using the debit card.  We will be charged a small fee after certain transactions if we withdraw money from any other ATM than our Bank’s ATM.  So, do not do such transactions without getting complete information about it.  Keep in mind that our bank will have restrictions on us for withdrawing money from our bank.  Make sure while withdrawing cash from any ATM that nobody is watching us get information about the debit card or PIN.  Apart from emergencies, withdraw money as far as possible from your bank ATMs.   

We can use the debit card for online transactions.  We can do online purchases, bill payments etc. using the debit card.  Bank has made a provision that our debit card is not stolen or no one gets information about it and cheats us.  According to that provision, our bank has given us a separate password for online transactions, or we have been asked to choose it.  The online purchase cannot be completed without this password.  So, this password also must be kept a secret.  Now the bank sends a one-time password (OTP) to us on our mobile instead of a password, which can be used for transactions. 

Credit card

Many of the things mentioned for the debit card above are also valid for a credit card. However, there is a significant difference between the two.  Since the debit card is linked with our bank account, the money is deducted from our bank account.  Credit card and our bank account are not at all linked.  Obviously, after using the credit card money is not deducted from our bank account.  We get the credit card bill at regular intervals.  It is essential to pay it in time, else the bank issuing the credit card can recover a significant interest on it from us.     

UPI

The ‘Unified Payment Interface’ (UPI) has become popular at a fantastic speed.    The technology is so powerful that, perhaps after a few years, the debit and credit card may not be used at all.  This technology has been created under the guidance of the Reserve Bank of India.  This technology is used by most of the medium and big banks.  This technology is the safest and most convenient if appropriately used.  

The APP must be downloaded on the smartphone if UPI is to be used.  There are various options for this. However, the three Apps ‘GooglePay’, ‘BHIM’ and ‘PhonePay’ have become very popular.  You can download any of the above three Apps on your smartphone.  Once you install this app in your smartphone, it will automatically show you the details of the bank account linked with your mobile number.  It means that if we have given our mobile number to the bank then all these bank accounts can be seen on the smartphone.  So that no one makes misuse of this bank account information, the app asks us for the information of the debit card of this bank account and asks to enter it and confirms with the bank that it is correct.  Once this is approved, we are ready to use the UPI.    

We can instantly transfer money from our bank account to anyone using the UPI through the app.  If the recipient is using UPI, it is okay; however, if he is not using it, it is not a problem.  We can transfer the money into his account using UPI App with information of his bank account like bank account number and IFSC code.  This transaction can be completed within seconds and money is deposited in his account.  Both will receive the respective messages accordingly.  If the other person is also using UPI, it is much easier then.  We do not even have to know the bank information of that person.  How is this possible?

An essential point in UPI technology is an identity like an email ID given to the user.  When I install an App like GooglePay on my smartphone, and it is linked with my bank account, then this app creates a new ‘UPI ID’ for you and shows it to you.  For example, my UPI ID is akhatemybank.  Once I get this UPI ID, then my work is easy.  Suppose I want to send money online to a person.    

I do not have to share my bank information with him.  I only have to tell him my UPI ID.  The person will open the UPI App on his smartphone and will select the option of sending money. Then the app will ask ‘whom’ you have to send the money.  The person will enter my UPI ID over there, will type the amount, and within seconds money will be transferred to my account!  This transaction will happen like it is from one ID to another.  The bank information will stay with him.  There is no need to share it now.

UPI can be misused if our phone is used by another unknown person; because the person can transfer money to his account by opening the app on our smartphone.  To prevent this from happening, it is mandatory to use the PIN while doing the financial transactions.  You can decide on your own PIN.

We can now make online purchases, bill payment effortlessly using UPI.  Now many shopkeepers, hotels, people providing services like Ola/Uber have started accepting payment through UPI.  There is also a facility for transferring money only by ‘scanning a code’.  This option is very convenient instead of using a card.  The prospect of UPI is going to be a vital option in financial transactions soon.   The prospect of using UPI is going to be a vital function in financial transactions in the near future.  

E-Wallet

If we create an illusionary ‘online’ wallet on the internet or create an illusionary wallet of our money?  This is called ‘Electronic Wallet (E-wallet)’.  ‘Paytm’ is the most famous example of this.  Now, Amazon, Ola and many other companies have E-Wallets.  Using our bank account, credit card, we can transfer money in this E-Wallet and then use it when required.  It means our money will stay in the company’s wallet for some time.   

The demonetization was declared in India at the end of 2016, at that time Paytm company came into limelight.  Lakhs of people opened their bank account with Paytm and deposited money in it and started using it.  The popularity of Paytm declined after some time.  The main reason is the UPI technology is more straightforward than this E-wallet technology, and also while using UPI, our money stays in our bank account.  In the E-wallet technology, our money is transferred to this E-wallet company.  UPI technology has removed the necessity of us transferring our money to this E-wallet company, and companies like Paytm do not have a very bright prospect.   

It is a personal question of whether we should use E-wallet or not; however, wherever possible use of UPI instead of E-wallet is definitely more convenient and beneficial.

Internet and mobile banking

Nowadays, almost all banks allow their users to do transactions through the internet or smartphone.  This helps the bank save a lot of cost in their branch.  The account holder can do a lot of banking transactions from home.  Other transactions, like paying bills online, purchasing, transferring money to others is also possible. 

The bank has provided us with a user ID and password for internet banking.  This information is meant to be kept secret.  We can log in to the bank website using this ID and password.  Then we can do our banking transaction from home.  Since some transactions are risky, the bank provides us with an OTP on our mobile, which we have to enter on the website while doing transactions.  If the computer and the smartphone have an excellent ‘antivirus’, then many risks involved in the online transactions are taken care of.  We must take care of these things while doing online transactions.

Mobile banking is a modern form of internet banking.  The transactions that can be done through a bank website using the internet can also be done through a mobile app.  For this, we have to download the mobile app of our bank.  

One important thing is that the bank or any financial institution will never call us to ask our bank account details or card details, password or PIN or any other secret information.  So, do not provide any such information if someone calls and asks for it.  Fraudulent persons make such calls.    

There are some fraudulent people at work to do such fraud work.  They try to get information from us using smart means.  Either the person threatens us or tries to tempt us.  For example, the person will say that the bank is giving us a new credit card or is going to credit the refund to our bank account and try to get our secret bank information.  He can also try to threaten by saying that bank account is hacked, or bank website is hacked, and try to obtain confidential information.  We should stay alert and stay away from this.   

Another method they can use to threaten us or tempt us is a written message.  They will send such messages through email, WhatsApp or SMS, which also has a link.  The message tells us to click the link.  The message resembles the message that we receive from the bank.  We believe that it is from the bank and click it.  We are required to enter the secret information like PIN, password etc.  We provide such information and it is taken by the fraudsters.

There are a lot of options available now to do banking transactions.  This can save a lot of effort time and energy.  It is the need of the hour to understand them and take care while using them.  Running from it saying I don’t understand is not the right way.

Atul Kahate (akahategmail.com) 

***

Originally Published in Yashashwi Udyojak. Subscribe Today.