Different popular online payment modes in India explained. Which one is best for you?

When it comes to making payments, there are a number of ways available to do that. Electronic payments have made our life a lot easier and we can now send any amount of money at any time when somebody is in urgent need of funds, no matter where he is hailing from. Online payment has not only made the life of normal people easier, but it also applies to small, medium and big owners,  they can easily process the transactions and deliver the goods and services it fast. it eventually reduces operational cost and related overhead expenses which is none less than the cherry on the pie.

But when it comes to India, there are a number of payment methods available and you should always choose the best one depending upon the amount that you are going to send, and the recipient or the beneficiary, in bank’s terms. Some payment modes are easier and more convenient than others. With time, online payments are getting more secure and hassle-free, you can even use online payments to pay for goods and services to the merchants,  which has come out to be an alternative to merchant payments using debit and credit cards. So, today I will talk about the different payment methods available and the best one that you should use depending upon your requirements.

So, without any further delay, let’s get started with the different payment methods available in India.

NEFT fund transfer

NEFT or National Electronic Funds Transfer is one of the most popular online payment modes of fund transfer available in India, where you can send any amount of money right from your bank account to the beneficiary who might have an account with a different bank, all within India. Starting from Re. 1, you can use NEFT to transfer funds up to any amount, right from your computer’s web browser from your mobile phone by opening the internet banking app that is given by your bank. RBI decided to remove charges for outward NEFT, which means, which means, you can use NEFT free of cost. Needless to say, inward NEFT, or if you receive funds through NEFT, no charges will be levied.

To transfer funds using NEFT, you need to enter the bank account information of a beneficiary, which includes the account number and IFSC code of the beneficiary’s branch. You need to provide all this information and save it within your internet banking account so that you can initiate fund transfers anytime. Even though you will require internet banking service activated to use NEFT, the inward transfers will take place without any problems, even if the beneficiary does not have access to internet banking. However, in case of fund transfer using NEFT, the fund transfer do not take on a real-time basis but will be processed in half-hourly batches, and as of now, you can use fund transfer using NEFT roughly from 8 AM to 7 PM, though dependent on the individual banks, except bank holidays, 2nd and 4th Saturdays, and Sundays, however from this December 2019, NEFT services will be available around the clock.

Even though NEFT requires entering the long account number and IFSC codes which can lead to errors, using NEFT, you can transfer funds to beneficiaries in Nepal, which can be really useful, if you have any friend or a family member living in Nepal. But people living in Nepal will not be able to send funds to India using NEFT.

RTGS fund transfer

RTGS or Real-Time Gross Settlement is another online payment option available for the Indians, which isn’t that mainstream, but I should keep it in the list of the different payment methods available in. Using RTGS or real-time gross settlement, the minimum amount that should be sent is Rs. 2,00,000, or Rs. 2 lakh, and it isn’t an amount most Indians will send every day. That is the reason, RTGS or real-time gross settlement is used mainly by corporate and other institutions and sometimes by normal customers, who want to send Rs. 2,00,000 or more. Unlike NEFT, in case of real-time gross settlement, everything will take place in real-time as the name suggests, and just like NEFT, RBI has plans to remove charges on outward RTGS transactions.

Talking about the timings, as of now RTGS can be used to transfer funds from this 7 AM to 6 PM, but from this December 2019, you likely can use RTGS to transfer funds at any time of the day. For sending money using RTGS as well, you will need the account number of the beneficiary and IFSC code of the beneficiary’s branch, and you require internet banking services to be able to use RTGS. 

In the case of both NEFT and RTGS transactions, just in case you initiate the transactions at a time when the services and not available by your or the beneficiary’s bank,  the transactions will be queued the next working day.

IMPS fund transfer

IMPS or Immediate Payment Service is a fairly new method for sending money, and it is one of the most popular modes of payments most people use or unknowingly depend upon do you nowadays. Why unknowingly, you will come to know that later, but using IMPS, you can send funds to the beneficiary at any time of the day and completely free of cost without any lower transaction limit for sending money. This eventually has made IMPS the most popular mode of payment, IMPS payment mode can be used to transfer money even from other apps and for using IMPS, as well, you will need the account number and the IFSC code of the bank branch of the beneficiary.

IMPS infrastructure is behind the most popular mode of payments today, which includes UPI, which has made money transfer the easiest ever by scanning QR code or simply by entering the mobile number of the beneficiary. Even if you want to use the core IMPS money transfer, you can do that, either from your internet banking website from the official or endorsed app of your bank, or from an endorsed third-party mobile app. IMPS service is also chargeable, however, it is likely to vary depending upon the bank,  where you are having the account from where you will transfer funds. 

UPI payment method

UPI or unified payment interface is the most popular online mode of payment available nowadays, which can be used to transfer funds from your account to somebody else using the mobile number of the recipient or the beneficiary right from your mobile. You must have heard about the UPI payment method if you are not living under a rock. In the case of UPI payment mode, you just need the alias of the beneficiary to transfer funds, which can be the mobile number along with an extra phase like ‘1234567890@upi’ or simply the mobile number, depending upon, how exactly, and using which app, you are setting up to use UPI.

At the time of creating a UPI ID for the first time, you will have to create a 4-6 digit passcode or PIN, which can be used for authentication to open the app, and for making transactions. Unlike most other payment modes, the maximum amount that you can send using UPI has been limited to just Rs. 1 lakh per day from one bank account. As UPI is based on the IMPS infrastructure, you can send money at any time of the day. You can find a plethora of apps, which is based on UPI, like Google Pay, Paytm, and BHIM being the most popular one among them.

With BHIM or Bharat Interface for Money, you can send a maximum of Rs. 40,000 per day, per transaction. However, BHIM can also be used to pay for goods and services by scanning QR Codes, and you can even pay bills, which are registered with BBPS or Bharat Bill Payment System. The BHIM app is also changing itself, and you can even use to do mobile recharges, book railway and flight tickets, and get all other services, by paying for them, right from your bank account.

Other online payment modes

So those were the most popular payment modes that you should know about. If you are using a feature phone, which is highly unlikely, you can even send money by dialling ‘*99#’ to send money and use other banking services. This number is the same across all mobile networks, and it uses Unstructured Supplementary Service Data or USSD to make payments. 

You can also send money using numerous apps like Paytm, PhonePe, Google Pay, Amazon Pay, which all rely on the UPI payment mode to send money to individuals, merchants, etc., right from your bank account, and vice versa. Some apps like Paytm, PhonePe also has their own wallets, the balance on which, can’t be sent using UPI. But you can see more within the apps to find out, how you can transfer funds between the wallet and the bank account so that you can send it using UPI.

Using SWIFT codes as well, you can send and receive funds from other countries, but it is a real challenge to find a SWIFT-enabled branch in your locality unless you are from a big city or metropolitan. However, you can always search for the SWIFT-enables branches of your favoured bank online, by visiting your bank’s official website.

Which payment method is best?

There is no doubt, UPI is the best mode of payment as it can be done right from our smartphones, which is really handy. But, there is a limit. For regular small value transactions, UPI can be the best mode of sending money, as long as it is below Rs. 40,000, and the recipient is also a registered UPI user having an MMID or UPI alias. However, if you want to get over the limit, NEFT, and IMPS are the only two solutions available, where the beneficiary just needs to have a bank account with a bank that has an IFSC code. I am keeping away RTGS, where the minimum transaction amount should be Rs. 2 lakh, and it is mainly suitable for businesses and institutions, who want to transfer funds in a bulk.

So, those were the online payment methods in India, that you should know about. To more about the charges, maximum limit, and other aspects, in certain payment modes, you should contact your bank’s customer care, or directly contact your bank branch, which is a better option. Almost all major Indian banks nowadays including the public sector, private, payment, and small banks have support for almost all the payment methods that I have discussed here.

Do you still have any questions? Feel free to comment on the same below.