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Recap of the Foundation Course: Payments

Before progressing to the Intermediate module, let's revisit the key concepts from the Foundation course on payments.

What Are Payments?

Payments refer to the exchange of money for goods or services. They are the fundamental process that enables transactions in daily life and are crucial to the functioning of the global economy.

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History of Payments

    Payments have evolved significantly over time. In ancient times, people used the barter system to exchange goods. This system was replaced by using goods like cocoa beans, salt, cowry shells, and beads as currency. Eventually, societies moved to coins, and in China, paper notes were introduced. 

     

    These forms of currency dominated for centuries until the advent of plastic money, such as debit and credit cards. With the rise of the internet, online payments and e-commerce emerged, followed by digital wallets. The most recent advancement is Unified Payments Interface (UPI), which allows for instant payments with just a smartphone, and technologies like NFC (Near Field Communication) and RFID (Radio Frequency Identification) have further enhanced payment convenience.

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Popular Payment Methods

    1. Cash: Physical money exchanged directly.
    2. Cheque: A written order to a bank to pay a specified amount.
    3. Demand Draft (DD): A prepaid financial instrument issued by a bank.
    4. UPI: A digital system for instant bank-to-bank transfers.
    5. Card Payment: Using debit or credit cards for purchases.
    6. Mobile Payment: Payments made through smartphone apps.
    7. NEFT: National Electronic Funds Transfer is a nationwide electronic funds transfer system for transferring funds between banks. It uses batch processing, funds are transferred in batches throughout the day (can take a few hours), and there is no minimum amount requirement.
    8. RTGS: Real-time Gross Settlement is an electronic funds transfer system for transferring funds in real-time between banks, with a ₹2 lakh minimum transfer requirement.

What is UPI?

Imagine needing to buy something but forgetting your wallet at home. No worries—your smartphone can handle the payment, thanks to UPI. Launched by the NPCI in 2016, UPI allows you to make instant payments with just a smartphone and an internet connection. After downloading a UPI-enabled app like BHIM, Google Pay, Paytm, or PhonePe, you can link your bank account, set up your UPI ID, and start sending money anytime, even outside of banking hours.

How to Transfer Money via UPI?

To transfer money via UPI, follow these simple steps:

 

  1. Download a UPI-enabled app.
  2. Set up your UPI ID and link your bank account (if using a non-banking app).
  3. Choose your preferred method to send money:
  • Scan a QR code: Securely scan the code, enter the amount, and input your UPI PIN.
  • Use UPI ID: Enter the recipient's UPI ID, the amount, and your PIN.
  • Send via phone number: Select a contact whose number is linked to UPI, enter the amount, and input your PIN.

In the intermediate module, we will go deeper into these payment methods, understand the security aspects of these payment methods, and explore the evolving landscape of digital payments, so that you can get a comprehensive overview of the payments ecosystem in India.