Digital Financial Tool and Application
Introduction
Technology-based financial tools and applications are created to simplify a range of financial services and transactions on digital platforms. These tools make advantage of digital technology to offer users simple, safe, and practical ways to handle transactions, make payments, and access financial services. Due to the increased use of smartphones, improved internet access, and developments in digital infrastructure, they have grown in popularity.
Digital Financial Tools
Tech solutions that enable online transactions and financial services are known as digital financial tools. They improve convenience and money management and include digital wallets, internet banking, investing platforms, and mobile payments.
Understanding OTP (One Time Password) and QR (Quick Responce Code)
One-Time Password (OTP):
One-Time Password, or OTP, is a one-of-a-kind, transient numerical code used for authentication. When logging into online accounts, making financial transactions, or confirming user identity, it adds an extra degree of protection. Each OTP has a single usage and is only good for a short period of time, usually a few minutes. The system sends an OTP to the registered mobile number or email address when a user starts a login or transaction. To authenticate their identity and finish the transaction safely, the user must input the OTP. OTPs assist guard against unauthorised access and lower the risk of fraud and identity theft.
Quick Response Code (QR Code):
A two-dimensional barcode called a QR code, or quick response code, holds data in a grid of black and white squares. It may store a variety of data kinds, including text, contact details, website URLs, and product specifications. Users require a QR code scanner app on their smartphones or other compatible devices in order to view the data contained in a QR code. The programme reads the data from the QR code and executes the desired action, such as displaying text, launching a website, or adding a contact. Due to their simplicity of usage and capacity for huge data storage, QR codes are frequently used for mobile payments, marketing campaigns, tickets, product labelling, and other applications.
UPI (Unified Payment Interface)
The National Payments Corporation of India (NPCI) created the real-time payment system known as UPI, or Unified Payment Interface. Users can use their smartphones to immediately transfer money between banks. By connecting bank accounts to a specific virtual payment address (VPA) or mobile phone, UPI makes it possible for quick, secure, and cashless transactions. Through a single smartphone app, users may do P2P transfers, pay utility bills, make online purchases, and more. Millions of users now regularly conduct financial transactions using UPI, which has transformed digital payments in India and made them more accessible and convenient.
AEPS (Aadhaar Enabled Payment System)
Aadhaar cardholders in India can conduct financial transactions using biometric authentication using the AEPS, or Aadhaar Enabled Payment System, a government-initiated payment system. Without the need of debit cards or PINs, it makes use of the unique identification number (Aadhaar) and biometric data (fingerprint or iris scan). AEPS enables banking operations at micro-ATMs run by Business Correspondents (BCs) all throughout the nation, including cash withdrawals, balance inquiries, fund transfers, and Aadhaar-to-Aadhaar fund transfers. By enabling quick and safe access to banking services for people who might not have typical bank accounts or debit cards, this approach supports financial inclusion.
USSD (Unstructured Supplementary Service Data)
A mobile device and the computer of the service provider communicate via the USSD, or Unstructured Supplementary Service Data, communication protocol to deliver text messages. Users can interact with a variety of services through it, including mobile banking, prepaid mobile recharges, balance checks, and other value-added services. On a mobile phone’s dialer, USSD codes are commonly input starting with “*,” followed by a string of digits, and concluding with “#.” Since USSD does not require internet connectivity and is compatible with even entry-level mobile phones, it is frequently utilised for simple and quick interactions with service providers.
Card (Credit / Debit)
Charge Card : A financial organisation, usually a bank, will offer its clients a plastic credit card.
By making purchases with a credit card, you are essentially borrowing money from the company that issued the card.The maximum amount you are permitted to borrow at any given time is determined by the card issuer by way of a credit limit.
Up to the credit limit, you can use the card to make purchases and pay the balance owed later—typically on a monthly billing cycle—by using the card to make purchases.
You won’t be charged interest if you pay the entire balance owing before the deadline. However, carrying a load will result in interest being added to the total due, therefore it’s critical to manage credit card debt sensibly.
Debit card : A plastic card issued by a financial institution called a debit card is connected to your checking account.
When you make a transaction with a debit card, the funds are immediately taken out of your bank account.
There is no borrowing required, and you are only able to spend the funds that are currently in your account.
Debit cards make it simple to access your money and make transactions without having to carry cash.
They are frequently used for regular transactions like buying groceries, petrol and other necessities.
e - Wallet
Advantages of e-wallets
E-wallets make it simple and quick to make payments, removing the need to carry actual currency or credit cards.
2. **Security**: Since your payment information is safely saved in the e-wallet, you can complete transactions without disclosing important information, which lowers the risk of data theft.
3. **Contactless Payments**: E-wallets offer contactless payments, encouraging sanitary transactions, which is crucial in circumstances like the COVID-19 pandemic.
4. **Rewards and Offers**: To entice customers, some e-wallets provide incentives like cashback, rewards, or discounts for using their services.
5. **Global Accessibility**: Many e-wallets allow for cross-border transactions, making them easier.
POS (Point of Sale)
The physical or online site where transactions between customers and merchants take place is known as the point of sale (POS). In order to process payments, compute totals, and manage inventory, hardware and software are needed. Sales are streamlined by POS systems, which also give firms data on which to base choices.
Internet Banking
Customers of financial institutions can undertake a variety of banking operations online via internet banking, commonly referred to as online banking or e-banking. Customers can access their bank accounts through online banking, make transactions, check balances, view transaction history, pay bills, move money between accounts and more—all from the comfort of their desktops or mobile devices. The necessity for in-person bank visits is diminished by this service, which improves banking accessibility and convenience.
National Electronic Fund Transfer (NEFT)
Interbank money transfers are made easier through the National Electronic Funds Transfer (NEFT) system in India. The Reserve Bank of India (RBI) oversees and manages it. NEFT makes it possible for people, organisations, and institutions to securely and quickly transfer money from one bank account to another. Depending on when a transaction is initiated, monies are settled in the beneficiary’s account either the same day or the following working day after it has been processed in hourly batches. Money transfers, bill payments, and online retail transactions are all common uses for NEFT.
Real Time Cross Settlement (RTGS)
Specifications of RTGS:
1. **Real-Time Processing**: RTGS transactions are processed instantly and on an individual basis, which means that as soon as the payment instruction is received, money is sent in real-time.
2. **Large-Value Transactions**: The main purpose of RTGS is to handle high-value transactions. In India, RTGS transactions typically have a minimum threshold amount.
3. There is neither systemic risk nor netting because RTGS transfers money on a gross basis (transaction by transaction). In order to reduce settlement risk, each transaction is settled separately.
4. **Times**: **Except for the second and fourth Saturdays, public holidays, and bank-specific holidays,** RTGS is open throughout regular business hours on weekdays and half-day on Saturdays.
5. **Fees**: Due to the real-time processing and settlement of large-value transactions, RTGS transactions often have higher fees than NEFT transactions.
Immediate Payment Service (IMPS)
Sure! The simple methods for using the Immediate Payment Service (IMPS) for fund transfers are as follows:
1. **Register**: Ensure that your bank has enabled internet or mobile banking for you.
2. Open your mobile banking app or sign in to your online banking account to access IMPS.
3. **Select Transfer**: Click on “IMPS” or “Funds Transfer.”
4. Enter the recipient’s bank account number and the institution’s IFSC code. If available, you can also utilise the recipient’s MMID and cellphone number.
5. Enter the transfer amount (**Enter Amount**).
6. **Authenticate**: Verify the transaction using the necessary authentication technique, such as a mobile banking PIN or an OTP (One-Time Password)..
Online Bill Payment
Online bill payment is a practical electronic solution that enables people and companies to safely pay their bills online. It does away with the requirement for using checks or going to actual payment locations. The following are the essential steps for paying bills online:
Choose a method of payment: Choose a payment option for online purchases that works for you, such as a credit/debit card, bank transfer, or e-wallet.
Register or log in: Log in with your account information to the bill paying application or website. You might need to register if you’re a new user by giving your information and setting up an account.
Biller Information: Enter the name, account number, and billing address of the biller or payee to add them as a payee.
Biller Information: Enter the name, account number, and billing address of the biller or payee to add them as a payee.
Describe the bill here: Enter the billing sum as well as any other necessary details, including as invoice number or reference code.
Review Payment: Make sure you are paying the right bill and amount by checking the payment information twice for accuracy.
