What to consider while transferring money online
Modern technology has enabled banks and various other businesses to streamline their services to a great extent. Nowadays most banks utilise various types of tech-based platforms to provide fast, accurate, and efficient services to their customers. The usage of advanced technology in the banking industry has contributed to the significant growth of banking industry in the past few years. From providing a host of banking services online to the convenience of mobile banking, customers are no longer required to visit the branch for many types of banking services. The customer who needs to open an RD/FD account, transfer money, apply for a service etc. can do so by either accessing the bank’s net banking service or use the bank’s mobile app. It could be possible that the mobile app doesn’t support or offer an exclusive service which is only available on the net banking section, however, most banks are working towards creating and offering a superior banking experience to their customers.
Though technology has been helping banks and customers in carrying out various types of banking services, it is also responsible for many incidents where the customers have fallen victim to fraud and lost their money without any refund from the bank. Hence, it is essential to be cautious while carrying out banking services online or through the mobile app. While performing online fund transfers, a customer is advised to take certain factors into consideration in order to experience a safe and reliable banking service.
When it comes to transferring money online, most banks provide multiple transfer methods such as National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS) Immediate Payment Service (IMPS), Wire Transfers, etc. The transfer methods differ based on the speed of transfer, the value of transaction, service availability, and other factors. Each of the fund transfer methods has its own advantages and disadvantages, however, the availability of multiple transfer methods provide flexibility and convenience to the customers. Moreover, many banks have started their own digital wallets in order to support digital transactions that will help India become a cashless economy. India is already seeing a surge in the usage of digital transactions after the demonetisation of higher valued currency.
Based on the individual’s requirements pertaining to the speed of transfer, fund value, and other factors, any of the following fund transfer methods can be utilised:
- National Electronic Funds Transfer (NEFT) – This is one of the most used methods for fund transfer which is popular for being cost-effective and easy. The person who initiates (originator) the transfer has to pay a nominal fee for this service. Under this methods, the funds are settled at different intervals of the day depending on the time it was initiated. With the least amount of restrictions, NEFT is also used for making bill payments for credit cards.
- Immediate Payment Service (IMPS) – IMPS allows the originator and the beneficiary to send and receive funds at any time of the day/night including sunday and bank holidays. The transaction fee for an IMPS transfer is higher than NEFT and the funds are settled almost immediately.
- Real Time Gross Settlement (RTGS) – RTGS is used for higher value fund transfers, it is popular for being the bank’s fastest option for money transfers. Under this method, the funds are settled in real-time without any delay or involvement of clearing houses.
The transaction fee for an online fund transfer depends on the bank, fund value, and the fund transfer method. Individuals can use either the bank’s net banking service or the mobile app to use any of the methods.
New methods of fund transfer
Also, the following options can be used for fund transfers:
- Digital wallets – Digital wallets are comparatively new in India. In order to use a digital wallet for fund transfers, the originator and the beneficiary must be registered with the same service provider. A digital wallet uses the mobile number of the user for the account registration purpose. Once registered, it acts as the account number that can be used by other wallet users to send funds. Based on the completion of KYC document and other eligibility criteria, there is a limit to the maximum amount of fund that can be added/stored in a digital wallet. After demonetisation which led to the shortage of cash supply, most people turned towards digital wallets to pay/receive payments for food, transport, and various other transactions.
- Unified Payments Interface – The government has also launched Unified Payments Interface (UPI) through the National Payments Corporation of India. Regulated by the Reserve Bank of India, this platform allows fund transfers between two bank accounts without the need of bank account details. Based on the mobile platform, UPI uses a Virtual Payment Address (VPA) to send or receive funds. The user creates the VPA during the signup process which requires bank account details. After the registration, the VPA will be used for receiving payments from other UPI users.
Things to keep in mind while initiating an online fund transfer
- Beneficiary’s details – The originator is required to enter the accurate details of the beneficiary to make sure the funds are reaching the right recipient and within time. The common beneficiary’s details required by banks –
- Name of the account holder
- Account number
- Bank’s name and branch location
- IFSC code – The fund transfers under NEFT and RTGS require the presence of Indian Financial System Code (IFSC) to accurately locate the beneficiary’s branch.
- Fund settlement time – It is the originator’s responsibility to choose the appropriate fund transfer method to ensure a timely fund settlement. The transaction fee is largely based on the speed at which the funds are settled in the beneficiary’s account.
- Transaction fee – The transaction fee for any type of fund transfer method is also based on the time taken for fund settlement. Additionally, a higher fund value will attract a higher transaction fee.
Ileana Lyardson is a financial analyst by profession. She also works as a content developer with several online finance websites. Her passion for all aspects of financial writing is evident in the expert industry coverage seen in her articles. She is also a monthly columnist for a reputed financial magazine in India.