Cashless transactions: In alternative 5 ways

Prime Minister Narendra Modi made a strong push for a ‘cashless economy’ in his monthly ‘Mann ki Baat’ radio address. A day later, his office publicised a number of alternative payment modes in a series of tweets titled ‘My mobile. My Bank. My wallet: Transactions without cash’

Here are the five alternatives that the PMO tweeted about:

1. Unified Payments Interface (UPI)

2. e-Wallet

3. Cards, PoS(Point of Sale)

4. Aadhaar Enabled Payment System (AEPS)

5.Unstructured Supplementary Service Data (USSD)

In detail

1.Unified Payments Interface (UPI):

“It’s as easy as sending a message from your phone! Every bank has its own mobile app – so it’s now possible to transact on your smart phone,” read the tweet from the PMO.

How:
Register your mobile number at your bank or ATM
Download the UPI app on your mobile
Make your unique ID
Set your UPI PIN

Advantage:
Transactions can be carried out from any location, between any two individuals
No need to pre-add beneficiary

2.e-Wallet:

“It’s as easy as sending photos through your phone! Through the e-Wallet, money transactions are possible with mobile or computer,” said the PMO tweet.

How:
Choose an e-wallet service of your convenience and download the app
Register your mobile number
Link this with your debit card, credit card or net banking

Advantages:
Many options available, from private players to wallets offered by banks and even telephone companies
Most wallet services allow recharges of denominations of the consumer’s choice

3.Cards, PoS:

These are pretty common in urban areas. PoS stands for ‘point of sale’. These are the payments you can make using your debit cards or credit cards.

How:
Get a debit card against your bank account, or apply for a credit card
Set and remember your PIN
Swipe your card, enter the amount to be paid, punch in your PIN

Advantages:
Debit cards come almost automatically with bank accounts
Cards can be used for withdrawals and deposits at ATMs across the country, and even abroad
Cards can also be used for online transactions

4.Aadhaar Enabled Payment System (AEPS):

“Why rely on your bank, when you can bank on Aadhaar! Now link your Aadhaar card with your bank account,” read the PMO tweet.

How:
Link your Aadhaar card with your bank account
Remember your Aadhaar number or carry a copy of your card
Remember the bank in which you have the account which has been linked to your Aadhaar card
Transactions to be authenticated using fingerprint recorded for Aadhaar biometrics

Advantages:
Balance inquiry, cash withdrawals, cash deposits and Aadhaar-to-Aadhaar fund transfers
No extra registrations needed
Could be useful in rural areas, with transaction carried out by banking correspondents

5.Unstructured Supplementary Service Data (USSD):

This allows fund transfers through the interface of any mobile phone.

How:
Link your mobile number to your bank account
Dial *99# from your phone
Identify your bank by entering the first three letters or the first four letters of your branch’s IFSC code
In the menu that pops up, chose ‘Fund Transfer-MMID’
Enter the mobile phone number and MMID of the recipient
Enter the transfer amount and your MPIN, followed by a space and the last four digits of your account number

Advantages:
No smartphone required
No mobile internet connection needed

Cashless Transactions Highlights

The RBI classifies every mode of cashless fund transfer or transaction using cards or mobile phones as ‘prepaid payment instrument’. These can be issued as smart cards, magnetic stripe cards, Net accounts, Net wallets, mobile accounts, mobile wallets or paper vouchers. These are classified into three types:

Closed: Issued by an entity for purchasing goods and services only from it, these don’t allow cash withdrawal or redemption. Ola Money is one such closed wallet.

Semi-closed: These are used to buy goods and services, including financial services, from merchants that have a specific contract with the issuer. These too don’t allow cash withdrawal or redemption and include wallets offered by service providers like Paytm and State Bank Buddy.

Open: These can be used to buy goods and services, including fund transfers at merchant locations, and also permit cash withdrawals at ATMs. All Visa and Master-Card ..

CASHLESS MODES
Mobile wallet: This is basically a virtual wallet available on your mobile phone. You can store cash on the mobile to make online or offline payments. Various service providers offer these wallets via mobile apps, which you need to download on the phone. You can transfer the money into these wallets online using credit/debit card or Net banking. This means that every time you pay a bill or buy online via the wallet, you won’t have to furnish your card details. You can use these to pay fees, bills and make online purchases.

Plastic money: This includes credit, debit and prepaid cards. The latter can be issued by banks or non-banks and can be physical or virtual. These can be bought and recharged online via Net banking and can be used to make online or point-of-sale purchases, even given as gift cards.

Net banking: This does not involve any wallet and is simply a method of online transfer of funds from your bank account to another bank account, credit card, or a third party. You can do it through a computer or mobile phone. Log in to your bank account on the Net and transfer money via national electronic funds transfer (NEFT), real-time gross settlement (RTGS) or immediate payment service (IMPS), all of which come at a nominal cost ranging from Rs 5-55.