Design credits: Sheetal Patil
The world is rapidly moving towards digitalisation, and there’s no denying its presence in almost all fields of our lives. Whether it is shopping, education, banking, groceries, bill payments, tax filing or any legal documentation; you can do all of it online! You can use your smartphone, laptop or desktop to carry out these online transactions. Even money has gone digital, with more and more people preferring to use digital cash payment methods rather than carrying hard cash around. So, let’s learn a little more about digital money and its different facets.
What is digital money?
Money in electronic form which is intangible, is known as digital money. It is used through electronic means such as computers, Credit or Debit cards, smartphones, etc. for carrying out any kind of financial transaction. Simply put, digital money is used for making online payments.
Forms of digital money transactions
A Debit Card is a plastic card used to withdraw cash from ATMs and to make payments for purchases made. The money is automatically deducted from your bank account when you carry out a transaction. The transaction can either be done online or at any retail store. With online shopping becoming extremely popular these days, you also get different discounts and attractive offers on your Debit Card. Although there are some daily withdrawal limits, Debit Cards, have already made a place in the market as an alternative to cash.
Credit Cards are another popular form of plastic money which allow the cardholder to make payments on credit at the point of sale of goods or services. An interest amount is charged on the amount of credit given to the cardholder, which varies from bank to bank.
You can also withdraw cash using your Credit Card, though you may have to pay a charge for doing this. Just like Debit Cards, Credit Cards too are extensively used for making online payments for shopping or other uses. You also get attractive deals on Credit Card purchases.
Credit Cards are issued by different banks and financial institutions. Every month a Credit Card statement is generated, where the amount borrowed on the card is reflected along with the interest charged. Remember, it’s important to pay the bill on time, every time to avoid late fee and interest charges piling up.
Additional reading: Credit or Debit Card: Which One’s Better?
NEFT (National Electronic Funds Transfer)
It is an electronic funds transfer system where you can transfer money from one bank account to another. It facilitates transfer of funds from one account to another through the internet. This system operates on an hourly basis, and the money is transferred as and when the request is received. The transfer of money happens immediately, unlike in an RTGS method, where it takes about a day to transfer funds. You can transfer your funds between 8 am to 6 pm on any working day. Beyond this timing, a payment will be scheduled for the next working day.
ECS (Electronic Clearing Service)
When there is a periodic and repetitive transaction, ECS facilitates payment and receipt of money. This electronic money transfer which is done at regular intervals, is known as Electronic Clearing Service. It can be used for making monthly payments towards a loan, Credit Card bill or any monthly insurance premium. Most companies use this payment method to pay interest and dividends on their securities to holders of such instruments. This system is also used by companies to pay salaries. It is a safe and cost effective method to electronically transfer your funds from one bank account to another on a periodic basis. Some banks charge a fee for using the ECS payment service.
Online payment wallets
These are digital wallets which are pre-loaded with money and can be used to make electronic payments for purchases of goods and services. This form of digital cash is fast gaining popularity as more and more people are using them to carry out transactions like DTH recharge, mobile recharge, bill payments, online shopping or for other reasons. In this system, your digital wallet is pre-loaded with money deposited through online banking from your savings bank account. It’s almost like using your Debit or Credit Card for making payments. Most retailers have a tie-up with these digital wallet companies.
Internet and Mobile Banking
One can do various banking transactions either with a smartphone or through a laptop/desktop with an internet connection. Most banks these days offer internet and mobile banking services to their clients for funds transfers, ordering a cheque book, bill payments, account balance enquiry, etc. Mobile and internet banking also need digital cash modes like Credit Cards or Debit Cards to make payments. It is undoubtedly a faster and smarter means of carrying out your banking transactions without having to visit the branch physically every time for every small need.
In today’s rapidly evolving virtual world, one needs to learn about using digital cash. These online transactions are faster, simpler, time-saving and cost-effective as well. All you need is to be aware of how to use digital cash payment methods, and your life will become much easier!