The penetration rate of digital or online transactions in India can be fathomed by a piece of data revealed by NCPI, where they have projected that the total P2P and P2M transactions for the month of Feb 2022 in India was 4527.49 million. The number presented above is a clear indication of successful digitization of the money transfer system. And scalable rapid technological growth is not only assisting the cause, but also increasing the rate at which we are imbibing the dream of Digital India.

Now you don’t have to step out of your zone to send money to a relative who is in immediate need, or stand in queues to withdraw cash to pay the grocery store. Just scan and pay.

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What is an Electronic Fund Transfer?
Electronic Fund Transfer (EFT) is a digital way to transfer money from one account to another account via a secured network. The transaction can happen between accounts within the same bank or different.

Examples of EFT - Some of the most widespread and popular modes of EFT are Internet Banking or Mobile Banking, NEFT, UPI, RTGS, IMPS and Digital Wallets.

Options to Transfer Money Online:

NEFT (National Electronic Fund Transfer)
Is an electronic way to transfer money between any two NEFT enabled bank accounts in India. It is regulated by the RBI. There is no limit on the amount that can be transferred via NEFT. You can initiate an NEFT transfer through Internet Banking or by visiting a bank’s branch. NEFT transactions are cleared on a half-hourly basis.

Steps to transfer money through NEFT online:

  1. Login to your account via Internet Banking
  2. Here you can add a beneficiary. Details required to add a beneficiary are – Account Holder’s Name, Account Number, and IFSC.
  3. After successfully adding a beneficiary, you can transfer funds to his/her account.
  4. The transaction is authenticated by OTP.

UPI (Unified Payments Interface)
Is a real time money transfer system developed by NCPI. It allows both Peer to Peer and Peer to Merchant transactions. It is a mobile based system to transfer funds instantly. Here you don’t have to share your or the receiver’s bank details. UPI uses VPA (Virtual Payment Address) to transfer funds.

Steps to transfer money through UPI:

  1. Download the UPI App and install it on your phone.
  2. Create your UPI account and login using the Login ID and Password
  3. Next, you can add a bank account; only accounts linked with your mobile number are accessible.
  4. You have to create your own VPA.
  5. Once you have created your VPA, you are eligible to transfer money.
  6. Enter the receiver’s VPA.
  7. Enter the amount you wish to transfer.
  8. Key in your UPI ID and press submit.

IMPS (Immediate Payment Service)
Is an immediate interbank digital payment system developed by NCPI? IMPS is popular as it is not time bound and can be initiated after banking hours and on bank holidays. Like NEFT and RTGS, you have to access to your bank’s internet banking portal to initiate an IMPS transaction.

RTGS (Real Time Gross Settlement)
Is a real time gross settlement of funds conducted through an electronic channel? It is mainly used for high value transactions. The minimum amount that can be transferred is INR 2 lakhs; there is no cap on the upper limit. Another useful feature of RTGS is its transaction nature. It is not batch oriented like NEFT. The money is immediately transferred to the beneficiary account.

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Steps to transfer money through IMPS & RTGS:

  1. Login to your account via Internet Banking
  2. Here you can add a beneficiary. Details required to add a beneficiary are - Account Holder’s Name, Account Number, and IFSC.
  3. After successfully adding a beneficiary, you can transfer funds to his/her account.
  4. The transaction is authenticated by OTP.

Digital Wallet
Also known as an e-wallet, is an electronic way to pay or transfer funds. You can top up your digital wallet at any time and pay a beneficiary using the available funds in your wallet. Money stored in digital wallets can also be used to recharge, pay bills and online shopping.
Some of the most common digital wallets are Apple Pay, PhonePe, Amazon Pay and Paytm.


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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.