Ever since the digitisation of monetary transactions, net banking has been traditionally used for fund transfer between bank accounts. More recently, however, Unified Payments Interface, or UPI on wallet, has quickly emerged as an extraordinary alternative. Their basic, underlying purpose is the same—the transfer of money, yet they differ greatly.
Speed, convenience, and technology are some significant factors that set them apart. UPI has swiftly taken over, but it has not entirely replaced net banking. Why is that so? In this article, we shall try to understand UPI and net banking, and what makes them different.
What is UPI?
UPI, or Unified Payment Interface, is a mobile payment system that enables real-time transfers of funds between two bank accounts and streamlines quick inter-bank transactions. In this system, one does not need to enter bank details every time. Therefore, UPI new apps are a quick and convenient way of making payments digitally.
It uses Virtual Payment Addresses (VPA), mobile phone numbers, or UPI ID for interoperational transactions across various banks. Its easy ‘scan QR code and pay’ mechanism has led to its popularity among merchants and consumers alike.
What is Net Banking?
Net Banking, short for Internet Banking, has been a conventional method of digital fund transfer. It is a banking service offered by all major banks in which the account holder can make online transactions using the recipient’s bank account details. It also allows you to check your account balance, pay bills, apply for loans, or avail yourself of other banking services. Like UPI on wallet, this service is available 24×7.
The bank provides you with a username and a password to log in to their app or website, after a biometric authentication. This eliminates the need to visit the bank for every transaction and allows you to manage your account digitally from a computer, tablet or smartphone.
How are They Different?
UPI and net banking are both used for online monetary transactions, but are set apart by various factors.
- Speed of transactions: A UPI transaction takes place within seconds. On the other hand, a net banking transaction is also fast and takes some minutes or hours, but it can get delayed, especially in case of an NEFT (National Electronic Fund Transfer).
- Ease of use: UPI new apps have made it incredibly easy to transfer money, with simple VPA-based transactions that involve entering a mobile number or scanning a QR code. All you need to do is remember the PIN. For net banking, the user must log in every time with OTP verification and enter all the recipient’s bank account details.
- Cost: Banks usually do not charge separately for net banking transactions, but may charge for other banking services. UPI is free for individuals. However, it charges merchants an interchange fee after a specific limit.
- Security: Both are reliable and secure methods of payment. UPI uses multi-layered security with app lock and PIN. Net banking entails multifactor authentication, making it strong but complex and time-consuming.
- Credit: Emerging services like UPI credit allow users to draw money beyond their account balance, up to a specified limit, ensuring uninterrupted transactions. While overdraft is a facility many banks offer, it is not an inherent feature of net banking.
Which One is Better?
UPI and net banking offer different features and benefits, making the choice between them dependent on your specific needs and situation.
- If you wish to make small payments from anywhere and at any time, UPI is a quick solution. It lets you conveniently transfer money at the touch of a few buttons on your smartphone without using much mobile data.
- For everyday, ordinary and minor transactions, you can pay directly from your UPI on wallet, which is not linked to your bank account, requires less authentication and time.
- Net banking is still significantly useful if you make high-value transactions or bulk transfers. It helps you add and manage multiple accounts through one portal.
Conclusion
Net banking, the traditional mode of digital fund transfer, and UPI, the revolutionary innovation in online payments, are both essential parts of the Indian economic landscape. They entail varied features and uses. While UPI is exceptionally fast and convenient, net banking is still relied upon for significant transactions.
Bajaj Finserv strives to ease all your financial requirements. Its the UPI new app, Bajaj Pay, makes transactions quick, safe, and hassle-free. With the Bajaj Pay wallet, you can pay your bills seamlessly and make those small payments faster. UPI is leading the digital payment revolution.