DEVELOPMENT OF
BANKING TECHNOLOGY
UNIT-3
PAYMENT SYSTEM
1. Paper based payments
Cheques
Demand draft
Payment order or bankers cheque
2. E-payments and remittances
E- banking/internet banking
Electronic clearing services
Electronic fund transfer
Real-time gross settlement
National electronic fund transfer
3. Plastic money/card based payments
Credit card
Debit card
E payments E- banking/internet
banking
E-Banking, or Electronic Banking, refers to digitalising traditional
banking services. It allows customers to conduct financial transactions
online without visiting a physical bank branch. It includes internet
banking, mobile banking, ATM services, electronic fund transfers (EFT),
and more
E payments E- banking/internet
banking
Features:
secure and convenient
Password protection
Access bank account anytime
Bank balance, transactions, statements.
Transfer via online
Bill payments
Cancel auto payment
Credit card dues
Demart account
shopping
ELECTRONIC FUND TRANSFER
Electronic funds transfer (EFT) is the transfer of money from one bank
account to another, either within a single financial institution or across
multiple institutions, via computer-based systems.
PAPERLESS
FAST
SECURE
CONVENIENT
WIDE USE
1-3 DAYS
LIMIT- NO LIMIT OR BANK WILL SET THE LIMIT
24/7
NATIONAL ELECTRNIC FUND
TRANSFER
NEFT is the electronic payment system developed by the reserve bank
of india that enable one to one finds transfer between banks in india.
Batch process- 48 times
No minimum limit
No maximum limit –banks may set limits
24/7/365
Mode- internet banking, mobile banking at bank branch
Required materials: beneficiary name, a/c number, IFSC, amount
Real time gross settlement
RTGS is a system where funds are transferred instantly and individually
from one bank to another.
Immediate money transfer
Minimum limit- 2L
Maximum limit- bank may set limit
24/7/365
As per RBI free of cost
Electronic clearing services
ECS is an electronic fund transfer used to bulk transaction where large
volume of payment or receipts are made regularly.
Types-
debit- used by institutions to collect payment
credit- used by institutions to make bulk payments.
Low cost
Bulk transfer- one to many- many to one
1-2 working days
PLASTIC MONEY
TYPES OF PLASTIC CARD
ATM CARD
DEBIT CARD
CREDIT CARD
CHARGE CARD
AMEX CARD
MASTER CARD
SMART CARD
DINNER CLUB CARD
CO- BRANDED CARD
Debit card & Credit card
1. Source of funds
•Credit card: Allows you to borrow money from the card issuer, up to a pre-approved credit
limit.
•Debit card: Withdraws funds directly from your own savings or checking account.
2. Spending limit
•Credit card: The maximum spending is determined by the credit limit set by the card issuer
based on your creditworthiness.
•Debit card: Your spending is limited to the available balance in your bank account.
3. Impact on credit score
•Credit card: Responsible use, including on-time payments, helps build and improve your
credit history. Mismanagement, like late payments, can damage it significantly.
•Debit card: Since you are not borrowing, debit card usage does not affect your credit score.
Debit card & Credit card
4. Interest and fees
•Credit card: Accrues high interest on outstanding balances not paid in full by the due date. Also involves various fees, including annual fees, late
payment fees, and cash advance fees.
•Debit card: Does not charge interest, as you are spending your own money. Overdraft fees may apply if you opt in to overdraft protection and
spend more than your account balance.
5. Fraud protection
•Credit card: Generally offers stronger consumer protection against fraud. In the U.S., cardholder liability is typically capped at $50, and many
issuers offer "zero-liability" policies.
•Debit card: Typically provides less robust fraud protection. While you are often covered, a fraudulent transaction can immediately drain your bank
account, requiring a potentially lengthy investigation to recover funds.
6. Cash flow management
•Credit card: Offers a grace period (often 20–50 days) on purchases, which can help businesses with short-term cash flow by deferring the
expense. This allows companies to maintain cash balances longer.
•Debit card: Transactions are immediately deducted from the account, offering real-time budget control and preventing overspending.
7. Rewards and benefits
•Credit card: Offers a variety of rewards programs, such as cashback, travel points, or miles, that can provide significant value when used
strategically.
•Debit card: Rewards programs are generally limited compared to credit cards, though some banks offer minor perks or cashback incentives.
Debit card & Credit card
8. Debt risk
•Credit card: High risk of accumulating debt, especially for those who carry a balance and are subject to high interest
rates.
•Debit card: Little to no risk of incurring debt since it uses your own funds. This is a key advantage for disciplined
spending.
9. Business applications
•Credit card: Useful for larger purchases, financing business expenses, and building a business credit history. Can also
offer specialized rewards for business spending.
•Debit card: Excellent for controlling daily operational expenses and for businesses that prefer to avoid debt. Offers
straightforward accounting since transactions are posted instantly.
10. Financial flexibility
•Credit card: Provides financial flexibility and can serve as an emergency fund for unexpected expenses,
allowing you to make purchases even when your cash reserves are low.
•Debit card: Offers limited flexibility, as spending is constrained by the funds available in your bank accoun
Security threats in e-banking
Phishing
Internet scam
Malware
Identity theft
Password cracking
Virus
Worm
spyware
RBI’S Initiative in tackling security
threats
Login details
Encrypted data
Logout
Two factor authorisation
Session timeout
Virtual keyboard
Online spending limit
IT ACT 2000
The information act 2000 is India primary law dealing with cybercrime
and electronic commerce. It was enacted to provide legal recognition to
electronic transaction and to facilitate e-governance.
Objective of it act:
Prevent cybercrimes
Enable e-governance
Protect privacy