Table of Contents:
1. Difference Between Payout Modes
7. Difference Between Payment Type And Payment Method
8. What Are The Five Important Tips In Starting A Business?
1. Difference Between Payout Modes
The year 2020 has observed massive transitions in the operation of every sector. The revolution that has hit the financial industry has impelled the businesses to discard the traditional methods of financial transactions and take up fresh ways of undertaking business activities, and financial technology is consistently growing. According to one market survey, the financial technologies market reached 127.66 billion dollars in 2018, while we expect it to strike 309 billion dollars by the year 2022.
If you wish to start your own business, then you must be well-aware of technological updates and changes in the market. Being aware of emerging technologies is a prerequisite for achieving business success. Some emerging technologies of 2020 to deliver seamless financial services are as follows -
- Artificial intelligence induced financial practices that will mitigate the risk of fraudulent activities, help manage risks, and identify a pattern in data to facilitate decision making without human interruption provide the ultimate consumer experience.
- Reintroduction of chatbots that are now enabled with AI to provide technologically advanced services. It is estimated that 85% of businesses will adopt the system of a chatbot to interact with consumers by the end of the year 2020.
- Blockchain will be the backbone of the financial industry as it will provide security and bring transparency in the system of operation. It is the most cost-effective method to keep track of transactions digitally.
- Automation can reduce manual work and improve efficiency. It can save up to 30% of the cost of financial businesses. The data-intensive tasks can be handled with ease and accuracy while improving the overall productivity of the business.
- Cloud computing is opening new gateways of easier reach to many consumers as more and more services are taking place in an online mode. With a convenient and user-friendly approach to digital management of financial practices, the demand for online platforms is soaring like never before.
The innovative transformation in technologies has also brought in various modes of payments like Wallet, UPI, NEFT, RTGS, and IMPS. An efficient entrepreneur must know the complete details of money management.
2. What Is UPI?
UPI full form is Unified Payment Interface is a real-time payment method developed by the National Payment Corporation of India (NPCI) and is regulated by the Reserve Bank of India. This inter-bank transaction facilitates the instant transfer of money through your mobile phone. You just need to check whether your bank supports transactions via UPI. If it does support, then you have to download any UPI app from among BHIM by NPCI, Paytm, Google Pay, Phonepe, etc. and register with your mobile number, and then you will receive an OTP for verification. Set a four-digit password for access to your account. Finally, link the account with your bank and create a UPI PIN. You can create a UPI PIN by providing the last 6 digits of your debit card and its expiry date. Your account will be ready to receive and transfer payments.
3. What Is A Wallet?
Quick and simple digital payment through your mobile phone, which is your virtual wallet is facilitating cashless transactions anytime, anywhere. Various apps support mobile payments. It stores your card details and reduces cash or card use every time you need to pay or receive a payment. Like a prepaid mobile phone, you can fill your wallet with your desired amount. The advanced techniques can recognise nearby ready-to-pay gateways called Near Field Communications (NFC). This technology allows transactions between two devices within a limited range.
4. What Is NEFT?
NEFT full form is National Electronic Fund Transfer backed by the Reserve Bank of India is a nationwide payment system that allows inter-bank payments and funds transfer. In 2019, Dec RBI declared a new system for payment through NEFT. According to it, transactions can be carried on every day, including the holidays. In January 2020, RBI made it mandatory for banks not to charge any amount for NEFT transactions through a savings account. You can use NEFT for paying EMIs, credit-card bills, and fulfil all other fund transfer requirements within two hours.
5. What Is RTGS?
RTGS full form is Real-time gross settlements are an instant payment system for high-value amounts. This real-time model of the transfer’s minimum amount of transaction is Rs.2 lakh. Organisations can have the advantage of scheduling their payments so that employers receive and transfer payments in an organised way. For the online transfer, the consumer will require the beneficiary’s name, account number, IFSC code, bank, and branch name.
6. What Is IMPS?
IMPS full form is Immediate Payment Service by NPCI is a 24*7 system of payment. As the name suggests, it is a quick or instant mode for transferring money. It is a fast and secure way of transferring and receiving money. The minimum transfer amount is Rs.1 and a maximum of Rs. 2 lakh per day. You can use both net bankings as well as mobile platforms for conducting transactions through IMPS.
7. Difference Between Payment Type And Payment Method
According to the national payment corporation, UPI in August recorded a transaction of 1.62 billion, and UPI payments increased by 8%. IMPS is also expected to grow by 2021 at a 100% annual growth rate. RTGS transaction volume amounted to 150 million in the year 2019. Analysing all the data will enable you to make the right decision for channelling your business transactions. You must also know the distinction between the distinct features offered by these modes of payments.
Here are a few prominent features of the payment systems -
Wallet | UPI | NEFT | RTGS | IMPS |
Instant transfer through virtual wallet in mobile phones with an overall transaction limit of Rs.1 lakh. | An instant transaction that is extremely convenient but limits to a maximum transaction of rupees one lakh per day. | The transfer is not instant. Transactions are settled in batches. However, there is no minimum transaction limit while the maximum limit is Rs. 10 lakh. | Real-time transfer of larger amounts as the minimum transaction amount is Rs. 2 lakh. | Instant transaction of smaller amounts as the maximum limit of the transaction is Rs. 2 lakh per day. |
Works on phone numbers. Once you install the app, you have to provide the mobile number of the other party to whom you want to send the amount. | Works with UPI IDs that you need to create when you link your bank account with the UPI app. | Account details are needed for transactions that can be done through net banking or mobile banking. | This legally backed transaction system requires all the account details of the beneficiary; the transaction is irreversible in the case of RTGS. | This process of transaction requires account details. However, if you want to transfer money through a mobile, you will need the phone number and MMID, i.e., mobile money identifier of the receiver. |
Electronic money transfers for on-the-go payments like shops, recharge bills, restaurant bills, or transferring money to a friend. | Digital money transfer can be used for multiple purposes to pay or receive money instantly like bill payments, in-app purchases, over-the-counter payments, etc. | NEFT can be used for credit card bill payments, EMI loan payments, foreign inward remittances, and lots more. | Businesses generally use RTGS for safe transactions of the higher value of money. | Other than transferring and receiving money, you can also check Aadhar linking status with your bank account. |
8. What Are The Five Important Tips In Starting A Business?
- Planning is the step to managing a business. Start with brainstorming a trendy business idea.
- A little research will go a long way. Analyse the market and look for every minute detail based on your idea.
- Get a certificate by undergoing training or course to buy the best knowledge in that field.
- Arrange funds for your business.
- Ensure digital presence through engaging website content. Finally, consider all the legal formalities to avoid any future disruption.
9. Key Takeaways
The ever-changing business environment becomes even more dynamic with the emergence of inventive technology. Keeping oneself updated is essential to compete in this digitally evolving market. The major payment methods are modified from time to time by its governing body. Knowing about the payment systems’ key features can help you decide on your transaction procedures for the business. The aspiring business owners must know the technological transitions occurring in the country to stay one step ahead of the competition. Certain tips based on facts will help future business owners to nurture their business systematically.
Also read:
Challenges Faced During Online Payments. How to Overcome Them?
Online Frauds: Online Scams in India
Best tips & tricks for Online Shopping
FAQs
Q. What is difference between UPI and IMPS?
Ans- UPI full form is Unified Payments Interface was developed by NPCI, which is regulated by the Reserve Bank of India(RBI). It is India's most popular instant payment settlement system that ensures immediate transfers. While the IMPS (Immediate Payment Service) prefers interbank electronics transfer instantly.
Q. Is UPI and NEFT same?
Ans- No, UPI and NEFT are totally different methods of online payouts in terms of the system. UPI aids immediate transfer for free, however, there's a limit of 1 Lakh Rupees per day transfer. On the other hand, NEFT takes care of the electronic funds transfer from any bank branch to any person having an account with any other bank branch in the country.
Q. What is difference between IMPS, NEFT, and RTGS?
Ans- If your transaction limit is above 2 Lakh Rupees, RTGS is a better and effective method of payment for the same. For the lower amount of payments in batches, NEFT is a recommended option, while IMPS is best suited for instant amount transfers to beneficiaries, better to use for business people.
Q. Is Google Pay NEFT or IMPS?
Ans- Neither, Google Pay is a UPI P2P (peer-to-peer) App payment method. It is limited to ₹2 lakh transaction per day. You can also transfer funds directly to a beneficiary's bank account via Bank Transfer, Phone Number, UPI ID or QR Code, and also Self-transfer from your single bank account to another.
Q. Is Google Pay bank transfer IMPS?
Ans- Yes, Google Pay is a UPI App but works on the IMPS Structure. UPI is based on mobile payments and uses the VPA of a beneficiary.
Q. Can we transfer money without IFSC code?
Ans- Only Domestic Money Transfer can be done without the IFSC code. IFSC stands for Indian Financial System Code which represents an 11 digit character that is usually visible on your bank's cheque book, other banks passbook, and your banks' mobile application.
Q. What is NEFT, RTGS, and IMPS fund transfer?
Ans- NEFT full form is National Electronic Funds Transfer, which works on the net and batch method. The RTGS full form is Real-time Gross Settlement Payment, which is irreversible and final. While IMPS full form being Immediate Payment Service, works as an instant money transfer method that transfers funds in the beneficiary's account within half an hour.
Q. Is IMPS transfer free?
Ans- No, IMPS transfer is not free. It charges a nominal fee ranging from 2.50 Rupees to 15 Rupees, depending on the amount of transfer along with additional GST charges.
Q. Which is cheaper NEFT or IMPS?
Ans- NEFT is cheaper than the IMPS method of transactions. NEFT charges start from a minimum of 1 Rupee per transaction and go up to 25 Rupees. While IMPS Charges from a minimum of 5 Rupees and go up to 15 Rupees per transaction.
Q. Is NEFT 24/7 now?
Ans- Yes, NEFT works 24 hours a day and for 365 days a year. NEFT generally generates automated payments even after usual banking hours that are initiated using 'Straight Through Processing (STP)' modes.
Q. Which is better NEFT or IMPS?
Ans- IMPS transfers your money instantly to the beneficiary's account while NEFT works on the net and batch method. With IMPS, the transferred amount reflects within half an hour of payment and with NEFT money gets transferred in the order which has been transacted. Hence, it depends on the individuals' needs or the company's rules to pick their desired payout method.
Q. Is there any charge for IMPS transfer?
Ans- The regular IMPS charges range from 2.50 Rupees to 25 Rupees starting from fund transfers of 10,000 Rupees to 2 Lakh Rupees. For example:
- Up to Rs. 10,000- Rs. 5 + GST
- From Rs. 10,000 to Rs. 1 lakh- Rs. 5 + GST
- From Rs. 1 lakh to Rs. 2 lakh- Rs. 15 + GST
Q. Is IMPS transfer safe?
Ans- Yes, all IMPS transfers are safe, cost-effective, and very secure. IMPS does not have any minimum transaction limit on funds transferring. It functions 24*7 and also works on holidays. You can make interbank as well as intrabank payments.
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