PAYMENT SYSTEM IN INDIA

What is payment?
A payment is the transfer of one form of good,service or financial asset in exchange for another form of
good,service or financial assets in proportions that have been previously agreed upon by all parties involved .
payment can be made in the form of funds , assets or services

EVOLUTION OF PAYMENT SYSTEM :

● Barter system
● Cash payment
● Cheque payment
● Online payment
● Mobile payment applications

Barter system
A barter system is an old method of exchange. This system has been used for centuries and long before
money was invented. People exchange services and goods for other services and goods in return.

Cash payment
A form of liquid funds given by a consumer to a provider of goods and services as compensation for the
receiving those products. In most domestic business transactions, a cash payment will typically be made in
the currency of the country where the transaction takes place, either in paper currency,in coins or in an
appropriate combination.

Cheque payment
A cheque is a negotiable instrument instructing a financial institution to pay a specific amount of a specific
currency from a specified transactional account held in the drawer’s name with that institution. Both the drawer
and payee may be natural persons or legal entities.

Online payment
Online payment refers to money that is exchange electronically. Typically, this involves use of computer
networks, the internet and digital stored value systems.online payment usually is the transaction that results in
transfer of monetary funds from the consumer bank or credit card account to your bank account.

Mobile payment
Mobile payment (also referred to as mobile money,mobile money transfer,and mobile wallet) generally refer to
payment services operated under financial regulation and performed from or via a mobile device.Instead of
paying with cash,cheque or credit cards, a consumer can use a mobile to pay for a wide range of services and
digital or hard goods.
Plastic Money
What is Plastic Money ?
● Plastic money is a term that is used predominantly in reference to the hard plastic cards we use
everyday in place of actual bank notes.
● They cancome in many different forms such as
○ Cash Cards
○ Credit Cards
○ Debit Cards
○ Pre-paid CashCards
○ In-store cards

Cash Card or ATM Card

● A card that will allow you to withdraw money directly from your bank via an Automated Teller Machine
(ATM) but it will not allow the holder to purchase anything directly with it.
● Unlike a debit card, in-store purchases or refunds with an ATM card can generally be made in person
only, as they require authenticationthrough apersonal identification number or PIN. In other words,
ATM cardscannot be used at merchants that only accept credit cards.
● In some countries, the two functions of ATM cards and debit cards are combined into a single card
called a debit card or also commonly called a bank card. These are able to perform banking tasks at
ATMs and also make point-of-sale transactions, both functions using a PIN.

What are Credit Cards?

● Again this card will permit the card holder to withdraw cash from an ATM, and a credit card will allow
the user to purchase goods and services directly, but unlike a Cash Card the money is basically a high
interest loan to the card holder, although the card holder can avoid any interest charges by paying the
balance off in full each month.
● A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy
goods and services based on the holder's promise to pay for these goods and services.The issuer of
the card create revolving account and grants a line of credit to the consumer (or the user) from which
the user can borrow money for payment to a merchant or as a cash advance to the user.

Parties involved
● Cardholder: The holder of the card used to make a purchase for the consumer.
● Card-issuing bank: The financial institution or other organization that issued the credit card to the
cardholder.
● Acquiring bank: The financial institution accepting payment for the products or services on behalf of
the merchant.
● Merchant account: This could refer to the acquiring bank or the independent sales organization, but
in general is the organization that the merchant deals with.
● Credit Card association: An association of card-issuing banks such as Discover, Visa, MasterCard,
American Express, etc. that set transaction terms for merchants, card-issuing banks, and acquiring
banks.
● Transaction network: The system that implements the mechanics of the electronic transactions. May
be operated by an independent company, and one company may operate multiple networks.
● Affinity partner: Some institutions lend their names to an issuer to attract customers that have a
strong relationship with that institution, and get paid a fee or a percentage of the balance for each card
issued using their name
● Insurance providers: Insurers underwriting various insurance protections offered as credit card perks
Transaction steps
● Authorization:The cardholder presents the card as payment to the merchant and the merchant
submits the transaction to the acquirer (acquiring bank). The acquirer verifies the credit card number,
the transaction type and the amount with the issuer (Card-issuing bank) and reserves that amount of
the cardholder's credit limit for the merchant. An authorization will generate an approval code, which
the merchant stores with the transaction.
● Batching: Authorized transactions are stored in "batches", which are sent to the acquirer. Batches are
typically submitted once per day at the end of the business day. If a transaction is not submitted in the
batch, the authorization will stay valid for a period determined by the issuer, after which the held
amount will be returned to the cardholder's available credit
● Clearing and Settlement: The acquirer sends the batch transactions through the credit card
association, which debits the issuers for payment and credits the acquirer. Essentially, the issuer pays
the acquirer for the transaction.
● Funding: Once the acquirer has been paid, the acquirer pays the merchant. The merchant receives
the amount totaling the funds in the batch minus either the "discount rate," "mid-qualified rate", or
"non-qualified rate" which are tiers of fees the merchant pays the acquirer for processing the
transactions.
● Chargebacks: A chargeback is an event in which money in a merchant account is held due to a
dispute relating to the transaction. Chargebacks are typically initiated by the cardholder. In the event of
a chargeback, the issuer returns the transaction to the acquirer for resolution. The acquirer then
forwards the chargeback to the merchant, who must either accept the chargeback or contest it.

Costs
Credit card issuers (banks) have several types of costs:
● Interest expenses Operating costs
● Charge offs or Bad Debts Rewards
● Fraud
● Promotion

Revenues
● Offsetting the costs are the following revenues:
● Interchange fee
● Interest on outstanding balances Over limit charges
● Fees charged to customers
○ Late payments or overdue payments
○ Charges that result in exceeding the credit limit on the card(whether done deliberately or by
mistake), caled over limit fees
○ Returned cheque fees or payment processing fees (e.g. phone payment fee) Cash advances
and convenience cheques
○ Transactions in a foreign currency. A few financial institutions do not charge a fee for this.
○ Membership fees (annual or monthly), sometimes a percentage of the credit limit.
○ Exchange rate loading fees.
Merits and Demerits to Customer
Merits
● Convenience
● Allows a short term credit to customer
● Provide more fraud protection than debit cards.
● Many credit cards offer rewards and benefits packages
Demerits
● High interest and bankruptcy Inflated pricing for all consumers Weakens self regulation

What is Debit Card?

● This type of card will directly debit money from your bank account, and can directly be used to
purchase goods and services. While there is no official credit facility with debit cards, as it is linked to
the bank account the limit is the limit of what is in the account, for instance if an overdraft facility is
available then the limit will be the extent of the overdraft.
● A debit card (also known as a bank card or check card) is a plastic card that provides the cardholder
electronic access to his or her bank account(s) at a financial institution. Some cards have a stored
value with which a payment is made, while most relay a message to the cardholder's bank to withdraw
funds from a designated account in favor of the payee's designated bank account. The card can be
used as an alternative payment method to cash when making purchases.

Types of debit card systems

● Online Debit System: Online debit cards require electronic authorization of every transaction and the
debits are reflected in the user’s account immediately.
● Offline Debit System: This type of debit card may be subject to a daily limit, and/or a maximum limit
equal to the current/checking account balance from which it draws funds. Transactions Conducted
with offline debit cards require 2–3 days to be reflected on users’ account balances.
● Electronic Purse Card System: Smart-card-based electronic purse systems (in which value is stored
on the card chip, not in an externally recorded account, so that machines accepting the card need no
network connectivity)

Advantages
● Customer having poor credit worthiness can opt for debit card.
● Instant finalization of accounts
● Less identification and scrutiny than personal checks, thereby making transactions quicker and less
intrusive.
● A debit card may be used to obtain cash from an ATM or a PIN-based transaction at no extra charge

Disadvantages
● Limited to the existing funds in the account to which it is linked
● Banks charging over-limit fees or non-sufficient funds fees based upon pre-authorizations, and even
attempted but refused transactions by the merchant
● Lower levels of security protection than credit cards
● More prone to frauds

Credit Card
● Transactions are of Credit Nature
● Risk of overspending
● Interest is charged to the holder of card in case of overdrawing
● Source of additional funds
Debit Card
● Transactions are of Debit Nature
● No or less risk of over spending
● Only Fees are charged on yearly basis for card usage
● Eliminates need to carry hard cash
What are In-store cards ?
These are used by the departmental stores mainly as marketing tools to retain customers and increases
turnover. The main features of in-store cards are as below:
● Issued by big department stores or retailers.
● Can be used only in retailers outlet or for purchasing the Company’s products.
● Little or no cost to retailers
● Usually developed by the traders in partnership with banks or financing companies who undertake the
administration and sometimes the financing involved.

Types on In-store card

● Budget Card: This card requires monthly payment on behalf of the holders. The cost of goods
purchased is spread over a certain period.
● Option Card: Here, payment can be either be made in full or at the cardholder’s discretion. However,
options available is subject to a minimum repayment and interest charged on the balance outstanding
amount.
● Monthly Card: The card holder is required to make the payment every month. No extension of credit
is given beyond a month. This card differs for budget card, where outstanding credit can be settled in
30 monthly statements.

Pre-paid Cash Cards

As the name suggests the user will add credit to the card themselves, and will not exceed that amount. These
are usually re-useable in that they can be 'topped up' however some cards, usually marketed as Gift Cards
are not re-useable and once the credit has been spent they are disposed of. They provide some specials
benefits or discounts to the holder of the card.
Pre-paid Cash Cards Examples:
● DMRC Smart Cards.
● Pantaloons Greencard.
● Cards used in Food courts of Malls.

Cash Management and Demand Forecasting in ATMs

● All retail banks including leaders are competing for a larger share of customers' financial transactions.
● Their efforts are directed toward attracting and retaining customers by offering them a basket of
tailor-made schemes supported by a state-of-the-art distribution system (the ATMs).
● The whole exercise is helping the banks to serve their customers fast and avoid human intervention
totally.
● And for the customers, ATMs offer hassle-free cash withdrawal.
● There are no more fighting with the bank's teller for change and fresh notes.
● All retail banks including leaders are competing for a larger share of customers' financial transactions.
● Their efforts are directed toward attracting and retaining customers by offering them a basket of
tailor-made schemes supported by a state-of-the-art distribution system (the ATMs).
● The whole exercise is helping the banks to serve their customers fast and avoid human intervention
totally.
● And for the customers, ATMs offer hassle-free cash withdrawal.
● There are no more fighting with the bank's teller for change and fresh notes.
Supply Chain of ATMs
● The supply chain in retail banks needs to be more responsive to the needs of the customers in
comparison to the traditional FMCG industry.
● All the intermediaries in the supply chain play an important role in making the supply chain more
efficient.
● The various aspects involved are :-
○ The logistics involved in ATM operations
○ Role of forecasting in retail outlets
○ ATMs Machines
○ The parameters that are taken into consideration,
○ Scope of network sharing
○ Issue of having the right mix of currency denomination to be able to satisfy the demand.
● The chronic problem faced in such a scenario is cash stock-outs and banks are increasingly trying to
synergize their supply chain with that of the external agents involved in this process.
● ATM Vendors,
● Outsourcing agents
● VISA network

The Players in Supply Chain

● The SBP
● The corporate branch of the bank in the city
● The retail branches
● The delivery channel coordinators
● Outsourced agents who take care of physical cash movement
● ATMs
● ATM vendors
● Cash flow
● information flow and
● IT infrastructure
● lead time of cash replenishment
● payments and receipts
● different denominations of currencies
● geographical locations
● status of accounts (corporate accounts and salary accounts).
In case of financial services and banks, it is presumed that the demand drivers for cash are those factors which
increase the propensity of cash withdrawal (retail as well as ATMs) and cash deposits

Demand Drivers in the supply chain

● Location of the branch/ATM
● Number of current accounts
● Resident accounts and their age profile (for example, some banks have a captive audience of pension
holders)
● Number of salary accounts
● Seasonal factors including weekends and festivities

Outsourced Agents for ATMs

● The outsourcing agent's account gets debited when it collects cash from the bank and it gets adjusted
when the money is transferred to the ATMs.
CASH DEMAND FORECASTING
There are four steps in any market forecast undertaken by an organization.
● Defining the market for the product/basket of products
● Dividing total industry demand into its main components
● Forecasting the drivers of demand in each segment and projecting how they are likely to change
● Conducting sensitivity analysis to understand the most critical assumptions and to gauge risks to the
baseline forecast

Selection of Forecasting Method

The selection of a forecasting method depends on the following factors:
● The context of the forecast
● Relevance and availability of historical data
● Time period to be forecasted
● Degree of accuracy desirable
● Cost benefit or value of the forecast to the bank
● Time available for making the analysis
The following are the factors that are kept in mind while forecasting tools for demand management of cash for
the branches as well as the ATMs.
● There is no stock-out situation in any of the branches as well as the ATMs.
● There is not much of idle cash lying since the opportunity cost of holding cash is quite high.
● The cost of delivering cash to the branches and ATMs through the outsourced agents is minimized.
● The lead time to deliver cash is minimized.
● The architecture of the supply chain also becomes an endogenous ( internal) variable since it has a
direct relationship with the efficiency/responsiveness of the supply chain.
● The nature of information flows,
● The lead times in every step of the chain,
● The relationship with the outsourced agents and
● The geographical location of the branches and the ATMs
● All these play an important factor in zeroing in on the most appropriate demand forecasting tool.
● Both time series data as well as judgmental forecasting is used by all the retail banks to predict the
demand for cash.
● Based on the demand forecasting tools, it was observed that location-wise daily data were captured to
forecast demand for the next month.
Time Series Analysis of Cash Withdrawals from ATMs
● In most banks, demand is forecasted for a period of one month at a time.
● Therefore, the demand for the month of October 2002 gets forecasted on 30 September 2002.
● The data from Bank (for the period of July–August 2003) on the basis of the monthly cash dispensed
from each of the ATMs aggregated over a month were collected.
● The figure X shows the total withdrawal of cash that has taken place in the month of September.
● Similarly, such tables are constructed for the last three months.
● Y and Z show the corresponding totals for the months of July and August.
● Therefore, the demand planner will have the cash withdrawal data for the last three months before him
and will be able to find out what has been the growth in the total cash outflow in this period of time.
● Using linear growth trends, one can initially predict that the total cash outflow for the month of October
also grew at a similar rate and a total figure is arrived at.
● But this figure in itself is erroneous since only the trend is taken into consideration without paying heed
to seasonality and judgmental factors.
● This growth which was calculated was the overall growth expected for the month of October.
● One can also take the site specific data and analyse the monthly growth based on the ATMs or the
branches.
● The overall trend can be increasing, decreasing or stagnant
● Corrected: The present trend for month is with last year's data to analyse the difference in the growth
rates.
● This difference is then added into the forecasted trend. Once the trend is achieved, the list of festivities
for the forecasted month is looked into.
● The dates are identified and then over and above the normal trend, the seasonality is factored in. (Eid)
● Sales Trends and Other Factors
● There are many salary accounts that banks have in their fold.
● These are those accounts where the salaries of the employees directly get credited to their respective
accounts.
● From the day of the salary payment, within next four to five days, it has been observed that normally 50
per cent to 70 per cent of the money is withdrawn by the account holders.
● Therefore, if the salary accounts get credited by the bank on the first of every month, then for the next
five days there has to be more cash that needs to be provided at the ATMs as well as the branches.
● To predict the outflow, a simple iteration is carried out whereby the number of salary accounts holders
(say 500) is multiplied by the average salary that is deposited in their respective accounts (say Rs.
15,000).
● This would help the planner to arrive at a figure representing the expected demand for cash in the next
few days exclusively because of the salary issue.
Judgmental factors in demand forecasting of cash
● Judgmental factors in demand forecasting of cash by banks are stated as follows:
● Safety margin—Banks take into consideration the lead time that they will take to reach cash to the
branches as well as the ATMs.
● The time to procure that cash from the RBI or from other branches is also factored in while deciding the
amount of cash that needs to be sent out.
● Also, in those ATMs which are situated far off, cash is disbursed there sufficiently in order to cater to the
demand for the next two days.
● These calculations are reached at after undertaking cost-benefit analysis at each ATM and branch.
Even in case of weekends (Saturday and Sunday), many of the banks are closed and hence the money
which is disbursed on Friday takes into account the expected demand in the weekends too.
● This type of system is primarily followed by smaller banks and in those ATMs where the volume of
transactions is at a low level.
● Cash inflows that are expected to take place—Inflows from the RBI from their own branches, cash
position maintenance as well as exogenous factors that effect the final decision of cash disbursal.
● ATMs are categorized by some of the banks depending on the volume of transaction that takes place
from the outlets.

CATEGORY OF ATMS:-
● ‘A’ Category: Average cash dispensed per day is greater than Rs. 7.5 lakh
● ‘B’ Category: Average cash dispensed per day is between Rs. 5 lakh and Rs. 7.5 lakh
● ‘C’ Category: Average cash dispensed per day is between Rs. 1.5 lakh and Rs. 5 lakh
● ‘D’ Category: Average cash dispensed per day is less than Rs. 1.5 lakh

Once the ATMs are categorized, a maximum cash retention limit is set on the basis of the following calculation
● SETTING LIMITS FOR EACH CATEGORY OF ATMS
○ ‘A’ Category Rs. 7.5 lakh × 3 = Rs. 22.50 lakh
○ ‘B’ Category Rs. (7.5 + 5) lakh/2 = Rs. 6.25 lakh × 3 = Rs. 18.75 lakh
○ ‘C’ Category Rs. (5 + 1.5) lakh/2 = Rs. 3.25 lakh × 3 = Rs. 9.75 lakh
○ ‘D’ Category Rs. 1.5 lakh × 3 = Rs. 4.5 lakh
● The average volume of transaction is taken into consideration in each of the categories.
● This value is multiplied by a factor of 3.
● This factor 3 has been derived after taking the data of the maximum withdrawals that has taken place
from each of the ATMs in the last three months and measuring the deviations, and then applying
judgment to the factor in any unexpected swings in demand and other external variables.
INFORMATION TECHNOLOGY ACT,2000 IN INDIA
OBJECTIVES:
● THE INFORMATION TECHNOLOGY ACT, 2000 ALSO KNOWN AS ITA-2000, OR THE IT ACT IS AN
ACT OF THE INDIAN PARLIAMENT (NO 21 OF 2000) NOTIFIED ON 17 OCTOBER 2000. IT IS THE
PRIMARY LAW IN INDIA DEALING WITH CYBERCRIME AND ELECTRONIC COMMERCE.
● THE ACT TO PROVIDE LEGAL RECOGNITION FOR TRANSACTIONS CARRIED OUT BY MEANS
OF ELECTRONIC DATA INTERCHANGE AND OTHER MEANS OF ELECTRONIC
COMMUNICATION, COMMONLY REFERRED TO AS "ELECTRONIC COMMERCE", WHICH
INVOLVE THE USE OF ALTERNATIVES TO PAPER-BASED METHODS OF COMMUNICATION AND
STORAGE OF INFORMATION, TO NUSTA EDITING ELECTRONIC FILING OF DOCUMENTS WITH
THE GOVERNMENT AGENCIES AND FURTHER TO AMEND THE INDIAN PENAL CODE, THE
INDIAN EVIDENCE ACT, 1872, THE BANKERS' BOOKS EVIDENCE ACT, 1891 AND THE RESERVE
BANK OF INDIA ACT, 1934 AND FAVOUR MATTERS CONNECTED THEREWITH OR INCIDENTAL
THERETO.

AMENDMENTS
● A MAJOR AMENDMENT WAS MADE IN 2008. IT INTRODUCED SECTION 66A WHICH PENALIZED
SENDING "OFFENSIVE MESSAGES". IT ALSO INTRODUCED SECTION 69, WHICH GAVE
AUTHORITIES THE POWER OF "INTERCEPTION OR MONITORING OR DECRYPTION OF ANY
INFORMATION THROUGH ANY COMPUTER RESOURCE". ADDITIONALLY, IT INTRODUCED
PROVISIONS ADDRESSING - PORNOGRAPHY, CHILD PORN, CYBER TERRORISM AND
VOYEURISM. THE AMENDMENT WAS PASSED ON 22 DECEMBER 2008 WITHOUT ANY DEBATE
IN LOK SABHA. THE NEXT DAY IT WAS PASSED BY THE RAJYA SABHA. IT WAS SIGNED INTO
LAW BY PRESIDENT PRATIBHA PATIL, ON 5 FEBRUARY 2009.

IMPORTANCE
The Indian government closely connects data to citizens' privacy and this is demonstrated when Shiv Shankar
Singh states, "Each person must be able to exercise a substantial degree of control over that data and its use.
Data protection is legal safeguard to prevent misuse of information about individual person on a medium
including computers.

STRICT DATA PRIVACY RULES

THE DATA PRIVACY RULES INTRODUCED IN THE ACT IN 2011 HAVE BEEN DESCRIBED AS TOO
STRICT BY SOME INDIAN AND US FIRMS. THE RULES REQUIRE FIRMS TO OBTAIN WRITTEN
PERMISSION FROM CUSTOMERS BEFORE COLLECTING AND USING THEIR PERSONAL DATA. THIS
HAS AFFECTED US FIRMS WHICH OUTSOURCE TO INDIAN COMPANIES. HOWEVER, SOME
COMPANIES HAVE WELCOMED THE STRICT RULES, SAYING IT WILL REMOVE FEARS OF
OUTSOURCING TO INDIAN COMPANIES
OFFENCES

Section Offence Penalty

Tampering with computer source
65 Imprisonment up to three years, or/and with fine up to ₹200,000
documents
66 Hacking with computer system Imprisonment up to three years, or/and with fine up to ₹500,000
Receiving stolen computer or
66B Imprisonment up to three years, or/and with fine up to ₹100,000
communication device
66C Using password of another person Imprisonment up to three years, or/and with fine up to ₹100,000

66D Cheating using computer resource Imprisonment up to three years, or/and with fine up to ₹100,000

66E Publishing private images of others Imprisonment up to three years, or/and with fine up to ₹200,000
66F Acts of cyberterrorism Imprisonment up to life.
Publishing information which
67 Imprisonment up to five years, or/and with fine up to ₹1,000,000
is obscene in electronic form.
Publishing images containing sexual
67A Imprisonment up to seven years, or/and with fine up to ₹1,000,000
acts
67C Failure to maintain records Imprisonment up to three years, or/and with fine.

68 Failure/refusal to comply with orders Imprisonment up to 2 years, or/and with fine up to ₹100,000

69 Failure/refusal to decrypt data Imprisonment up to seven years and possible fine.

Securing access or attempting to

70 Imprisonment up to ten years, or/and with fine.
secure access to a protected system

71 Misrepresentation Imprisonment up to 2 years, or/and with fine up to ₹100,000

72 Breach of confidentiality and privacy Imprisonment up to 2 years, or/and with fine up to ₹100,000
Disclosure of information in breach of
72A Imprisonment up to 3 years, or/and with fine up to ₹500,000
lawful contract
Publishing electronic signature
73 Imprisonment up to 2 years, or/and with fine up to ₹100,000
certificate false in certain particulars

74 Publication for fraudulent purpose Imprisonment up to 2 years, or/and with fine up to ₹100,000
Security threats in e-banking & RBI‘s initiative
Threats in E-bank
● Identify Theft
● Spoofing
● Ransomware
● Business e-Mail compromise
● Spyware & Adware

Identity Theft
● Identity theft is a cyber threat in which a hacker steals someone else’s financial or personal data and
uses it for their selfish, illicit activities
● the stolen bank data is sold on the dark web to buyers

Spoofing
● a hacker mimics an official banking website and then uses spoofed email to bait victims into visiting
these websites
● The username and passwords are harvested, either to be sold, or even misused by the hackers
themselves to authenticate transactions and withdrawals

Ransomware
● hacker injects malware into a system
● Uses phishing e-mails
● demands a whole lot of money in exchange for access

Spyware & Adware

Spyware is a type of software that secretively collects user information while on the internet

Business e-Mail compromise

● the banking sector has also adapted to email communication
● Phishing attack

RBI Initiatives
● IP address capture for transaction may be considered
● System alert to be introduced for beneficiary addition
● Limiting the number of beneficiaries to be added per day to be considered
● Firewalls
● Multi-factor Authentication
● Adaptive Authentication
● Automatic Logouts
● Access levels of data

ELECTRONIC BANKING
Electronic banking uses an electronic medium to help users get access to their funds. It eliminates the need for
the bank’s customers to visit the bank to do financial transactions. With more and more customers now using
the internet for a host of their day-to-day activities, this digital medium of banking makes banking more
accessible and convenient for users. E-banking covers facilities such as – fund transfer, checking account
statements, utility bill payments, opening of bank account, locating nearest ATM, obtain information on financial
products and services, applying for loans, etc. using a personal computer, smartphone, laptop or personal
digital assistant.
FEATURES OF E - BANKING
1.Faster Transactions
2.Lowers Transactions Cost
3.Provides 24*7 services
4.Reduces the chances of error
5.Develops loyalty in customers
6.Removes geographical barriers
7.Provides Better Productivity
8.Reduce Frauds in Transactions

Classification of E-Banking
Type 1: This is the essential degree of administrations or services that banks offer through their sites. Through
this assistance, the bank offers data, information regarding its assistance, the bank offers data, information
regarding its services and products to clients. Further, a few banks might respond to an inquiry through email
as well.
Type 2: In this category, banks permit their clients to submit directions or applications for various
administrations, check their record balance, and so on.
Type 3: In the third category, banks permit their clients to work or operate their records or accounts for bill
payments, purchase and redeem securities and fund transfers, and so on.

Types of E-Banking services

Internet Banking:
● Internet Banking is a type of e-banking service which allows you to do several financial and
non-financial transactions through the internet. You can use your PC or laptop and an internet
connection to use this facility.
● With the help of Internet Banking, you can transfer funds to another bank account, check your account
statement, pay utility bills and do a lot more.
Mobile Banking
Most banks now also have an app for Mobile Banking. Just like the online portal of the bank used for Internet
Banking, you can use the app for many different types of banking transactions. If you use an Android or iOS
device, you can download the app of your bank and use this facility. The apps can also be used for transferring
funds, checking account statements, locate the nearest ATM, and other banking services.
ATM
ATM or Automated Teller Machine is one of the most popular types of electronic banking. The teller machine is
also an electronic computerized telecommunication device which enables you to withdraw funds, deposit
funds, change Debit Card Personal Identification Number (PIN), and use other banking services. It eliminates
the need of visiting a bank and doing these transactions through a human teller.
Debit Card
You might already be using Debit Cards for many of your daily transactions. This card is connected to your
bank account and you can use the funds from your account directly through this card. When you use your
Debit Card for a transaction, the transaction amount is deducted from your bank account. You can use the card
to pay at POS outlets, shop online, and withdraw cash from ATMs.