Types of Transactions in Bank

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Transactions in Bank

With the expansion of the world economy comes transaction volume and variety increases across all nations. Due to their increasing popularity, cash transactions are impractical. As a result, every country’s major and regional banks and financial institutions provide various digital payment solutions. 

To understand all forms of transactions, you don’t have to be a banker. We frequently create many of them but are unaware of many others.

What Types Of Banking Transactions Are There?

Money transfers between bank accounts can be done in a variety of ways. Online money transfers are now the simplest way to send money effortlessly from one bank to another, owing to technological advances. 

You can perform a variety of banking transactions in person, over the phone, or online. All banking transactions have the following categories to make things easier:

  1. NEFT (National Electronic Fund Transfer) – One of the most popular ways to transfer money between banks. The idea of NEFT has gained enormous popularity in the nation as the world gradually transitions to internet banking, a simple method of transferring money. 

A user can electronically transfer funds from any bank branch to another branch of that bank without going to the bank.

But the NEFT system settles funds in 23 half-hourly batches, fund transfers do not take place in real-time.

  1. RTGS (Real Time Gross Settlement) – is an ongoing process of settling interbank payments on an individual order basis across the books of a central bank. 

Large-value interbank fund transactions typically use real-time gross settlement. Global central banks use RTGS systems more frequently to reduce the risks associated with high-value payment settlements between financial institutions.

Large value transactions that need and receive immediate clearing are

the main use cases for the RTGS system.

  1. IMPS (Immediate Payment Service) – NEFT and RTGS combined into IMPS is another way to describe it. Mobile phones are used for the instant interbank electronic payment transfer service known as Immediate Payment Service (IMPS). 

All you need to complete an IMPS transaction are the receivers (the account holders), IMPS ID (MMID), and phone number. Additionally, it is being expanded through additional means like ATMs, internet banking, etc.

The most common method of IMPS is done by Indian Financial System Code (IFSC)

  1. UPI (Unified Payments Interface) – is a system that integrates various bank accounts, smooth fund routing, and merchant payments into a single mobile application. 

This new feature can use your smartphone as a virtual debit card. With the aid of UPI, you can send and receive money instantly.

  1. Banking cards – include ATM, credit card, and debit cards connected to a depository account. Those cards can be used to make purchases and, in some situations, cash withdrawals. 

A bank issues it. Nowadays, in addition to the typical magnetic stripe, most bank cards also feature EMV chips for further protection.

Transactions in Bank

  1. AEPS (Aadhaar Enabled Payment System) – a kind of payment system that uses the UIN to enable Aadhaar cardholders to conduct financial transactions easily using Aadhaar-based authentication.

AEPS is a bank-led model that permits interoperable financial transactions online at Points of Sale.

  1. PoS terminals – A hardware system known as a point-of-sale at the airport is used in retail settings to handle card payments. Smartphones with built-in card readers and countertop terminals that print receipts and scan bar codes are examples of POS terminals.
  2. Cheque – A cheque is a document that instructs a bank to withdraw a certain sum of money from a person’s account and pay it to the person listed as the payee on the cheque. 

Payments can be made using checks safely, securely, and simply. Since there is no use of actual cash in the transfer process, there is less risk of loss or theft, making it a secure alternative.

  1. Demand Drafts – A demand draft, sometimes known as a DD, is a bank-issued negotiable instrument that ensures a specific payment amount while providing the payee’s name. 

When neither party knows the other well, and there is a lack of confidence between the parties, DDs are used.

  1. Banker’s Cheque or Payment Order – The bank guarantees a banker’s check, which is identical to a banker’s draft. A banker’s cheque must be deposited at the bank for the recipient to receive the specified sum of money. 

The day following the deposit is typically when the cheques are cleared. A watermark, one of the security measures included in bankers’ cheques, helps protect them from being counterfeited.

Conclusion:

  • Banking has changed many lower-class people living in India. It’s the only tool in the financial planning process for individuals who don’t have knowledge of equity or debt markets
  • Several payments and transaction solutions have sped up and simplified moving money between bank accounts in India.
  • Many banks, private businesses, and government organizations implement payment and transaction mechanisms like NEFT, RTGS, and IMPS. 
  • As a result, there is now less distance between businesses and their clients and other interested parties. These techniques are quick, simple, and helpful.
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