Banking Then And Now: Two Methods Of Digital Banking

Banking has come a long way, beginning from temples loaning money in ancient Greece and Rome to digital banking in recent years. Of course, banking has existed ever since currencies have. However, some experts suggest that banking may have existed even before that, in one form or another. In particular, coins grew due to taxation. Due to the expansion of empires, there was a need for functional systems to collect taxes and distribute wealth.

Banking began when empires had to pay for foreign goods and services that they exchanged quickly. Coins of varying sizes replaced fragile and impermanent paper bills. Coins were, however, needed to be kept safe and ancient homes did not have steel safes. According to a few sources, the rich kept their coins and jewels in the basement of temples, as the place of priests and temple workers were considered devout. And honesty and the armed guards added a sense of security. There is historical evidence that temples lent money as well as kept them safe.

Even though banks have come a long way since the temples of the ancient world, they have core business practices that remain the same. They issue credit and loans and demand interest on top of the repayment of the loan. Although history, to some extent, has altered the business model of banks, the crucial purpose of a bank is still to give loans and protect the depositors’ money. Even today, online banking and financing are replacing the traditional physical bank but are still performing their primary functions.

With the availability of services like bank UPI and online banking, the old methods of physically transferring money have mostly vanished. Especially after demonetization, people’s interests have changed to online modes of payment.

Let’s go through two methods of online money transfer and understand the reason behind this increase in digital money transfer:

Unified Payment Interface (UPI) is the most recent way of transferring money from one bank to another. This mode of payment is accustomed by the National Payments Corporation of India (NPCI) and the Reserve Bank of India (RBI). This method eliminates the need for the receiver’s complex bank account details to initiate the transfer.

A UPI ID acts as a virtual Payment address. In addition, it acts as a security password for confirming the transaction. These are the only two things required for transferring money through UPI. You have to create the UPI ID and PIN at the time of registration on the UPI BHIM app.

A credit card is also referred to as plastic money. It is a payment card issued to customers, enabling them to pay merchants to purchase products and services. Therefore, they are considered an essential alternative to cash. Usually, credit cards are not a prime payment method, but it is one of the methods used to access funds in case of urgency to meet one’s financial requirements. You will need to type in your credit card number, your Card Verification Value (CVV), and your card’s expiry date for an online transaction.

The simplicity and the ease to use of these methods is what makes them popular and widely used.