INTRODUCTION

HISTORY
From the barter system, to wiring money via telegraph, and now with
online payments- the ways that a customer could complete a purchase
have evolved greatly throughout the years.

Banking in India originated in the last decades of the 18th century.

The oldest bank in existence in India is the State Bank of India a
government-owned bank that traces its origins back to June 1806 and
that is the largest commercial bank in the country. Central banking is
the responsibility of the Reserve Bank of India 1935 formally took
over these responsibilities from the then Imperial Bank of India,
relegating it to commercial banking functions. After India's
independence in 1947, the Reserve Bank was nationalized and given
broader powers. In 1969 the government nationalized the 14 largest
commercial banks; the government nationalized the six next largest in
1980.
 
Currently, India has 96 scheduled commercial banks (SCBs) - 27
public sector banks (that is with the Government of India holding a
stake), 31 private banks (these do not have government stake; they
may be publicly listed and traded on stock exchanges) and 38 foreign
banks. They have a combined network of over 53,000 branches and
17,000 ATMs. According to a report by ICRA Limited, a rating
agency, the public sector banks hold over 75 percent of total assets of
the banking industry, with the private and foreign banks holding
18.2% and 6.5% respectively.

In particular, online payments are now an irreplaceable part of

modern-day lifestyle. It's safe to say that we're seeing more banks,
online shops and many other industries offering customers to make
purchases online, making mobile and point-of-sale transactions a
whole lot simpler.
Brief History of Digital Payments
The precursor to the modern online banking services was distance
banking electronically and by telephone since the early 1980s. The
term 'online' became popular in the late 1980s and referred to the use
of a terminal, keyboard, and TV or monitor to access the banking
system using a phone line. 'Home banking' can also refer to the use of
a numeric keypad to send tones down a phone line with instructions to
the bank.

The roots of electronic payment can be traced back to 1871, when

Western Union debuted the electronic fund transfer (EFT) in the U.S..
It was the first time when people could pay for goods and services
without having to be present during the transaction process. Forms of
payment continue to transform since then, including the launch of the
first modern-day credit card by the Bank of America in 1958.

However, it was not until the 1960s when the U.S. Advanced
Research Projects Agency Network (ARPANET) was launched. The
platform laid the foundation for the internet that we’re familiar with
today, paving the way for the next evolution of payment methods.

In 1996 Industrial Credit and Investment Corporation of India was the

first to use Electronic banking in India by introducing online banking
services in branches. Its initiatives were followed by HDFC Bank,
IndusInd Bank and Citibank, who started provided online banking
facilities in 1999.

ICICI was the first bank to champion its usage and introduced internet
banking to its customers in 1996.
First online banking services by region

The United Kingdom

Online banking started in the United Kingdom with the launch

of Nottingham Building Society (NBS)'s Homelink service in
September 1982, initially on a restricted basis, before it was expanded
nationally in 1983.[13] Homelink was delivered through a partnership
with the Bank of Scotland and British Telecom's Prestel service.
[14]
 The system used Prestel viewlink system and a computer, such as
the BBC Micro, or keyboard (Tandata Td1400) connected to the
telephone system and television set. The system allowed users to
"transfer money between accounts, pay bills and arrange loans...
compare prices and order goods from a few major retailers, check
local restaurant menus or real estate listings, arrange vacations... enter
bids in Homelink's regular auctions and send electronic mail to other
Homelink users."

China

In January 2015, WeBank, the online bank created by Tencent, started

4-month-long online banking trail operation.

India

In 1998, ICICI Bank introduced internet banking to its customers.

Canada

Virtual banking first became a possibility in 1996 with the Bank of

Montreal's mbanx. mbanx was released at the very beginning of the
internet banking revolution in Canada and was the first full-service
online bank [22] Also in 1996, RBC started providing banking
information online and had the first personal computer banking
software released that year

Brazil

In 1996, Banco Original SA launched its online-only retail banking.

[19]
 In 2019 new banks began to emerge as the Conta Simples, focused
only for companies.

The United States

In the United States in-home banking was "is still in its infancy" with
banks "cautiously testing consumer interest" in 1984, a year after
online banking went national in the UK.[14] At the time Chemical
Bank in New York was "still working out the bugs from its service,
which offers somewhat limited features".[14] The service from
Chemical, called Pronto, was launched in 1983 and was aimed at
individuals and small businesses. It enabled them to maintain
electronic checkbook registers, see account balances, and transfer
funds between checking and savings accounts. The other three major
banks — Citibank, Chase Bank and Manufacturers Hanover —
started to offer home banking services soon after. Chemical's Pronto
failed to attract enough customers to break even and was abandoned
in 1989. Other banks had a similar experience.
Since it first appeared in the United States, online banking has been
federally governed by the Electronic Funds Transfer Act of 1978.
MEANING

What Is Online Banking?

Online banking allows a user to conduct financial transactions via the
Internet. Online banking is also known as Internet banking or web
banking.

Online banking offers customers almost every service traditionally

available through a local branch including deposits, transfers, and
online bill payments. Virtually every banking institution has some
form of online banking, available both on desktop versions and
through mobile apps.

E-banking is a system that provides various online banking services to

customers using the internet and telecommunication network. This is
a means through which customers are able to access their bank
account online and perform various financial transactions via the
internet.

 Online banking allows a user to conduct financial transactions

via the Internet.

 Consumers aren't required to visit a bank branch in order to

complete most of their basic banking transactions.

 A customer needs a device, an Internet connection, and a bank

card to register. Once registered, the consumer sets up a
password to begin using the service.

Definition of E-Banking
 
E-Banking is defined as the automated delivery of new and
traditional banking products and services directly to customers
through electronic, interactive communication channels, E-banking
includes  the systems that enable financial institution  customers,
individuals of businesses, to access accounts, transact business, or
obtain information on financial products and services through a public
or private network, including the Internet. Customers access e-
banking services using an intelligent electronic device, such as a
personal computer, personal digital assistant, automated teller
machine, Touch tone telephone. While the risks and controls are
similar for the various e-banking access channels, this booklet focuses
specifically on Internet-based services.
 

Understanding Online Banking

With online banking, consumers aren't required to visit a bank branch
to complete most of their basic banking transactions. They can do all
of this at their own convenience, wherever they want—at home, at
work, or on the go.

Online banking requires a computer or other device, an Internet

connection, and a bank or debit card. In order to access the service,
clients need to register for their bank's online banking service. In
order to register, they need to create a password. Once that's done,
they can use the service to do all their banking.

Banking transactions offered online vary by the institution. Most

banks generally offer basic services such as transfers and bill
payments. Some banks also allow customers to open up new accounts
and apply for credit cards through online banking portals. Other
functions may include ordering checks, putting stop payments on
checks, or reporting a change of address.

Checks can now be deposited online through a mobile app. The

customer simply enters the amount before taking a photo of the front
and back of the check to complete the deposit.

Online banking does not permit the purchase of traveler's checks,

bank drafts, certain wire transfers, or the completion of certain credit
applications like mortgages. These transactions still need to take
place face-to-face with a bank representative.
Online Banks
Some banks operate exclusively online, with no physical branch.
These banks handle customer service by phone, email, or online chat.
Online banking is frequently performed on mobile devices now that
Wi-Fi and 5G networks are widely available. It can also be done on a
desktop computer.

These banks may not provide direct automatic teller machine (ATM)

access but will make provisions for consumers to use ATMs at other
banks and retail stores. They may reimburse consumers for some of
the ATM fees charged by other financial institutions. Reduced
overhead costs associated with not having physical branches typically
allow online banks to offer consumers significant savings on banking
fees. They also offer higher interest rates on accounts.
OBJECTIVES OF ONLINE BANKING

To Attract Customers
one of the important objectives of e-banking is to attract customers.
E-banking is helping the customers by providing online services. it is
attracting the customers and making the banking system easier.
To Provide Liquidity
E-banking helps to provide liquidity to the banks, because consumers
do online transactions, which means there are no withdrawal of
physical money. So, E-banking to provide liquidity.
To Boost Economy
E-banking helps to boost the economy, Because online transaction
helps to maintain the cash in the economy, which would be use during
recession of the economy.
To Provide 24/7 Service
The world economy is growing, people are doing business globally. it
require 24*7 banking service. E-banking doing the same, to provide
24*7 service. it is one of the important objectives of e-banking.
CONCEPTUAL OVERVIEW
Salient Features of Internet Banking
 
The salient features of Internet Banking in India enlisted below
 
Ø  Easily adoptable by customers.
Ø  Easy to deploy and maintains.
Ø  Cost effective solution.
Ø  Enables the bank to reach its customers on the net.
Ø  Reduce rush at the counters of the bank.
Ø  Enables the customers of the bank to access information from
anywhere and at any time.
Ø  Balance and transaction history search.
Ø  Transaction history export.
Ø  Order new statements.
Ø  Mobile banking.
Ø  Transfers.
Ø  Pay bills with BPAY
Ø  Receive bills online with BPAY view
Ø  Pay anyone payments.
Ø  Multi payments
Ø  SMS banking services
 
 ADVANTAGES OF ONLINE BANKING
In addition to being able to bank at any time, from anywhere, there
are other advantages to banking online. You may also be able to:

Pay bills online

This might be one of the top advantages of online banking because
you don’t have to take time out of your day to go to the bank. You can
simply log into your account and pay your bill online right away. For
increased efficiency, you may also set up automated bill payments,
which helps you manage your cash flow when you have monthly
payments to and from vendors.

Transfer money
You may need to do a rapid money transfer to a client or vendor, or
you may need to transfer money from one account to another. Instead
of sending a registered cheque and waiting for it to clear, you may
securely transfer the money online.

Deposit cheques online

Rather than driving to a bank branch and waiting in line, you may be
able to deposit cheques online in minutes. And because most financial
institutions have an app that replicates its services from your phone,
you have the ability to always bank on the go. Plus, some banks offer
24/7 customer service, so you can speak to a customer service
representative at any time.

Lower your overhead fees

If your business banks online, your banking fees may be lower, as
online banks may not have to pay for the cost and upkeep of branches,
and those savings may be transferred to you. Plus, they may have
more no-fee options that add to your savings.

Environmentally Preferable
Online banking greatly minimises the usage of paper because you
receive all banking correspondence via email or text. A USB stick
makes data storage and management simple, as does virtually storing
data in the "cloud." Additionally, if you need to produce records for
tax purposes, you can easily access this information. So when it
comes to doing your part to protect the environment, you can feel
good about banking online.

Accessibility

While traditional banking hours aren't always convenient, online

banking allows you to access your accounts and bank services
whenever you need them on a computer or mobile device, anywhere
there is an internet connection. Customer care is also accessible by
phone, frequently around-the-clock, seven days a week.

Simple and Quick Transactions

In terms of speedy money transfers and deposits, online banks do

better than traditional banks. You may deposit cheques using an
application and transfer funds from another checking account to your
online bank without having to search for and visit an ATM.

Some other advantages of Online Banking are-

Ø  It is safe, hassle free, saves hours of time a month.
Ø  Greater reach to customers.
Ø  Quicker time to market.
Ø  Ability to introduce new products and services quickly and
successfully.
Ø  Ability to understand its customer needs.
Ø  Customers are given access to information easily across any
location.
Ø  Greater customer loyalty.
Ø  There are no geographical barriers.
Ø  Getting quarterly statements from the bank, transferring funds to
outstation.
 Disadvantages of online banking
While online banking is always improving, there are some
disadvantages for business owners reliant on immediate and constant
access to their banking services.

Technology disruptions
Online banking relies on a strong internet connection. If your internet
is disrupted by a power outage, server issues at your bank, or if you’re
in a remote location, your ability to access your accounts might be
affected. Scheduled site maintenance also means you can’t access
your accounts and may have to seek an alternative.

Lack of a personal relationship

A personal relationship with your bank may be able to offer an
advantage over online banking. If you need a business loan, a new
line of credit, a waived fee or to make changes to your current
banking needs, having that relationship can help.
In-person banking relationships can also help you craft a business
account tailored to your specific needs. They can also make notes in
your files about cheques, cash deposits and international payments so
you can avoid extended holds on your money.
An ideal relationship would be a blend of online banking for your
day-to-day transactions and a personal relationship with your banker
to assist with bigger needs. That way, you have multiple options to
support your business.

Privacy and security concerns

Financial institutions have very good security, but no system is

foolproof. Valuable information is always prone to hacks, but you
might be able to prevent this if you:

 Always use the mobile app and the website directly. You should
see a small lock to the left of the search bar, which indicates the
site is secure.
  Make sure you have a strong password based on a combination
of numbers, symbols and letters. It’s also important to change
your password regularly.

 Do not click on any links in text messages if you haven’t agreed

to that method of communication.

 Use two-step authentication, which adds an extra layer of

security.

Limited services
Online banking features a lot of services, but some of them still
require business owners to go into banks to “wet sign” documents.
This includes loan and credit applications, a large cash withdrawal or
large deposits. But as online banking technology continues to evolve,
you may eventually be able to electronically sign for these in the
future.
These days, banks know business owners want the ease and
convenience of online banking, so they’re constantly upgrading and
improving their digital assets. You may take advantage of this rapidly
changing banking technology and tailor an online banking system that
is unique to your business needs. If you think online banking could
benefit your business, talk to your bank about the time- and cost-
saving advantages of going digital.

Deposit Restrictions

Individuals, particularly enterprises, may find it challenging to make

significant online deposits due to daily or monthly mobile deposit
restrictions. Once you've spent your allotted amount, you'll need to
make the trip to a bank to make a deposit. Additionally, not all check
types can be read by computer scanning software with ease. For
instance, handwritten company checks with a black line on the back
to create a carbon copy in an account register would not be accepted
by the internet deposit system, necessitating an on-site deposit.

Faster is Not Always More Convenient

Even while it can just take a few seconds to deposit a check using a
bank's mobile app, you still have to wait before your money is
available. Online banking is convenient in that it saves time on travel
and line waiting at branches, but depending on the amount placed, it
might take up to three business days for all deposits to be reviewed
and monies to be made available for access.

Possibility of Overspending

Some people could exceed their checking account limitations as a

result of being able to check account balances on the spur of the
moment. The account balance might not accurately reflect your true
available funds unless you carefully review your chequebook or a list
of debit transactions that were not cleared. If you don't keep a close
eye on all of your transactions, overdrafts and fees may happen.

Some other disadvantages of Online banking are-

Ø  Lack of knowledge about the service
Ø  Inaccessibility
Ø  Inertia
Ø  Managerial implications
TYPES OF ONLINE BANKING:
Different types of online financial transactions are:

 National Electronic Fund Transfer (NEFT)

National Electronic Funds Transfer (NEFT) is a nation-wide payment
system facilitating one-to-one funds transfer. Under this Scheme,
individuals, firms and corporates can electronically transfer funds
from any bank branch to any individual, firm or corporate having an
account with any other bank branch in the country participating in the
Scheme. Individuals, firms or corporates maintaining accounts with a
bank branch can transfer funds using NEFT. Even such individuals
who do not have a bank account (walk-in customers) can also deposit
cash at the NEFT-enabled branches with instructions to transfer funds
using NEFT. However, such cash remittances will be restricted to a
maximum of Rs.50,000/- per transaction. NEFT, thus, facilitates
originators or remitters to initiate funds transfer transactions even
without having a bank account. Presently, NEFT operates in hourly
batches - there are twelve settlements from 8 am to 7 pm on week
days (Monday through Friday) and six settlements from 8 am to 1 pm
on Saturdays.

 Real Time Gross Settlement (RTGS)

RTGS is defined as the continuous (real-time) settlement of funds
transfers individually on an order by order basis (without netting).
'Real Time' means the processing of instructions at the time they are
received rather than at some later time; 'Gross Settlement' means the
settlement of funds transfer instructions occurs individually (on an
instruction by instruction basis). Considering that the funds settlement
takes place in the books of the Reserve Bank of India, the payments
are final and irrevocable. The RTGS system is primarily meant for
large value transactions. The minimum amount to be remitted through
RTGS is 2 lakh. There is no upper ceiling for RTGS transactions. The
RTGS service for customer's transactions is available to banks from
9.00 hours to 16.30 hours on week days and from 9.00 hours to 14:00
hours on Saturdays for settlement at the RBI end. However, the
timings that the banks follow may vary depending on the customer
timings of the bank branches.

 Electronic Clearing System (ECS)

ECS is an alternative method for effecting payment transactions in
respect of the utility-bill-payments such as telephone bills, electricity
bills, insurance premia, card payments and loan repayments, etc.,
which would obviate the need for issuing and handling paper
instruments and thereby facilitate improved customer service by
banks / companies / corporations / government departments, etc.,
collecting / receiving the payments.

 Immediate Payment Service (IMPS)

IMPS offers an instant, 24X7, interbank electronic fund transfer
service through mobile phones. IMPS is an emphatic tool to transfer
money instantly within banks across India through mobile, internet
and ATM which is not only safe but also economical both in financial
and non-financial perspectives.
 Objectives of IMPS:
 To enable bank customers to use mobile instruments as a

channel for accessing their banks accounts and remit funds

 Making payment simpler just with the mobile number of the
beneficiary
 To sub-serve the goal of Reserve Bank of India (RBI) in
electronification of retail payments
 To facilitate mobile payment systems already introduced in
India with the Reserve Bank of India Mobile Payment
Guidelines 2008 to be inter-operable across banks and
mobile operators in a safe and secured manner
 To build the foundation for a full range of mobile based
Banking services.
APP BASED PAYMENT SYSTEM
Internet banking, also known as online banking, e-banking or virtual
banking, is an electronic payment system that enables customers of a
bank or other financial institution to conduct a range of financial
transactions through the financial institution's website.

Mobile banks

Mobile banks work via mobile applications on a smartphone or tablet

device. Many traditional banks offer a mobile app to supplement their
online and physical presence. Some newer banks exist primarily on
mobile platforms.

What is the difference between online banking and mobile banking?

Mobile banking is done on a mobile or tablet device via a specific
application. Online banking doesn't require a mobile app. Almost any
internet-connected device, including smartphones and tablets, can
access online banking through a web browser.

Beyond that, however, mobile banking offers similar services to

online banking. The pros and cons between them are similar as well.

What Is A Payment App/ Mobile Wallet?

A payment app or a mobile wallet is a mobile application that allows

you to store your debit or credit card information that can be used to
pay for goods and services in digital money instead of using physical
cards or cash and also send money online to friends, family, or
merchants in an instant. It is just like having a digital wallet on your
phone.

Digital payments are a fast-growing industry in India. There are over

50 third-party applications that are operational under the UPI system.
 In a bid to ensure parity among the players, the National Payments
Corporation of India (NPCI) capped the market share to 30%, limiting
their share in the overall volume of transactions on the unified
payment interface.

This Bangalore-based online payment app is India's first UPI-enabled

payment app, backed by Walmart-owned Flipkart with over 300
million registered users across India. PhonePe leads the UPI payment
market in India with a 46.04% market share.

Here is our list of the best digital payment apps in India:

PhonePe

With PhonePe, you can transfer money, recharge, pay bills, shop
online, book flights, invest, etc. Since it works on the UPI system, you
can link your bank account with your PhonePe account to make
transactions. You can also make payments through PhonePe wallet,
debit card, and credit card.

You can link your other existing e-wallets such as Jio Money, Airtel
Money, and others with the PhonePe app for hassle-free money
transfer between these wallets.

Google Pay

Google Pay, formerly launched as Tez in India is a digital payment

app from Google which utilizes the UPI to enable in-app, online, in-
store, and in-person cashless transactions on mobile devices, tablets,
smartwatches. Users can send and request money from other Google
Pay users within India.

Google Pay India also has similar product offerings in other markets
such as various cashback and other rewards including scratch cards,
discounts, etc.
 As per the latest data from the NPCI, Google Pay shares 34.36% of
the total UPI payment market in India, second to PhonePe. There are
over 70 million active users in the country.

Paytm

Paytm (or pay through mobile) is a Noida-based fintech firm that is

owned by One97 Communications. Paytm is one of India's largest
mobile payments and e-commerce player. It allows cashless
transactions through the Paytm app or Paytm website.

Paytm wallet lets you store and send money from one wallet to
another wallet or pay directly from your bank account using the UPI.
You can recharge your mobile phones, metro cards, data cards, DTH
cable and make utility bills payments, postpaid payments. Or book
movies and travel tickets, do online shopping or use at various
locations such as taxis, grocery shops, restaurants, malls, etc.

With over 150 million active users, Paytm continues to be at the top
with the largest volume of transactions by any payment firm in India.
Paytm is valued at $16 billion as of 2020.

Amazon Pay

Amazon Pay, owned by e-commerce giant Amazon is an online

payment service that allows customers to use payment methods stored
in their Amazon account for the purchase of goods and services on
Amazon and other third-party e-commerce websites. Users can also
pay utility bills, phone bills, send money to contacts, and more.

You can also set up Amazon Pay UPI for UPI transactions by
registering through the Amazon app. Amazon UPI services are
provided by Axis Bank. There are now 50 million customers using
Amazon Pay UPI services.
BHIM (Bharat Interface for Money)
BHIM (Bharat Interface for Money) is an Indian mobile
payment app developed by the National Payments Corporation of
India (NPCI), based on the Unified Payments Interface (UPI).
Launched on 30 December 2016,[1] it is intended to facilitate e-
payments directly through banks and encourage cashless transactions.
[2]
 It was named after the Dalit leader Dr Bhimrao Ambedkar.[3]
The application supports all Indian banks which use UPI, which is
built over the Immediate Payment Service (IMPS) infrastructure and
allows the user to instantly transfer money between 170 member
banks[4] of any two parties.[5] It can be used on all mobile devices.

BharatPe

BharatPe is an Indian fintech company that caters to small merchants

and kirana store owners in India .[2] The company offers a range of
fintech products including interoperable QR code for UPI payments,
Bharat Swipe (POS machine) for card acceptance, and small business
financing.
It facilitates small merchants to accept payments via Unified
Payments Interface (UPI) for free, through BharatPe QR codes. It also
offers merchant loans of up to ₹7 lakh (US$9,800) for a duration of 3
to 12 months. The other products include and a peer to peer lending
product called 12% Club.[3] In 2020, the company launched a new
product, Digital Gold, which allows the users to transact for 24-carat
gold containing 99.5% purity.
Sr.
No. Parameter   Google Pay PhonePe Paytm
(a)share in total July, 2018 335 million 111 million 100 million
number of
700 million
Transactions July, 2019 335 million 300 million
Feb-19 220 million 220 million 225 million
May-19 240 million 230 million 200 million
(b)UPI
Jul-19 300 million 335 million 133 million
transactions and
Sep-19 320 million 340 million 157 million
growth
Continuous Continuous Not Continuous
  growth growth growth
In march
(c) ATV $4.6
1 2019 $2.6 $2.4
37.4% + other
2018 apps 19.60% 43.00%
2
25.2% + other
Market share 2019 apps 32.80% 42%
From 2018
3 83% profit
Losses/Profits to 2019 140% loss 165% loss
Jul-18 40 million 23 million 80 million
4 Jul-19 25 million 55 million 140 million
User Badge Sep-19 67 million 55 million 140 million
Provides Wallet Provides Wallet
5 No wallet facility
Wallet Facility   facility facility
Cashbacks & Directly added to
6
Rewards   the bank account Added to wallet Added to wallet
7 Security   More secure More secure Less secure
KYC
8 Not required
Compliance   Required Required
Own Bank
9 Not provided
Facility   Not provided Provided
CONCLUSION:

The use of these apps for making online payments has made a huge
growth in few years. The number of users using these apps is
increasing significantly day by day. The wallet facility of these apps
attracts a lot
of users. The authors analysed that among the three most popular
payment Apps used in India namely, Google Pay, PhonePe and
Paytm, Google Pay is highly preferred for making high value
transactions
as it makes payment directly from the bank account as compared to
other apps. More security features need to be added to increase the
user-base further in future.
EMERGENCE OF ONLINE PAYMENT SYSTEM
The emergence of e-commerce has created new financial needs that in
many cases cannot be effectively fulfilled by the traditional payment
systems. Recognizing this, virtually all interested parties are exploring
various types of electronic payment system and issues surrounding
electronic payment system and digital currency. Broadly electronic
payment systems can be classified into four categories: Online Credit
Card Payment System, Online Electronic Cash System, Electronic
Cheque System and Smart Cards based Electronic Payment System.
Each payment system has its advantages and disadvantages for the
customers and merchants. These payment systems have numbers of
requirements: e.g. security, acceptability, convenience, cost,
anonymity, control, and traceability. Therefore, instead of focusing on
the technological specifications of various electronic payment
systems, the researcher have distinguished electronic payment
systems based on what is being transmitted over the network; and
analyze the difference of each electronic payment system by
evaluating their requirements, characteristics and assess the
applicability of each system.

India has a huge potential for digital payments. As of October 2021,

the country had around 1.18 billion mobile connections, 700 million
Internet users, and about 600 million smartphones. These numbers are
growing rapidly each quarter. With about 25.5 billion real-time
payment transactions, India ranked first in the world in terms of the
number of transactions in 2020.

In 1996, Industrial Credit and Investment Corporation of India

(ICICI) introduced online banking services in India, by using
electronic banking at its branches. Later in 1999, banks such as
HDFC, IndusInd, and Citi launched online banking facilities. The
trend continued to grow with increasingly more banks launching net
banking services in India. This marked the beginning of the digital
transactions era in India – several new banks started offering services
to users.

In 2008, the National Payments Corporation of India (NPCI) started

its journey. It was formed by the Reserve Bank of India (RBI) and
Indian Banks’ Association (IBA) in order to create a robust payment
and settlement infrastructure in India. Since then, it has launched
several products such as Aadhaar Enabled Payments System, Bharat
Bill Payments System (BBPS), BHIM, and Cheque Transaction
System.

Newer models are emerging rapidly; currently, there are around 10

different types of digital payment methods in India. These include:

 Banking Card – This was launched by the Central Bank of India

in India in 1980, in the form of the first credit card. MasterCard
was introduced in 1988, and until 1993, several PSU banks
started issuing credit cards.
 Unstructured Supplementary Service Data (USSD) – The USSD
functionality was launched in 2016. This is a mobile banking
facility enabling users to use mobile banking without
smartphones or an Internet connection.
 Aadhaar Enabled Payment Systems (AEPS) – This is a bank-led
model which allows online interoperable financial inclusion
transactions at point-of-sale (PoS) through the business
correspondent of any bank using the Aadhaar authentication.
 Unified Payments Interface (UPI) – UPI was developed by
NPCI in 2016; it facilitates peer-to-peer, person-to-merchant
transactions.
 Mobile Wallet – This is a virtual wallet that stores payment card
information on a mobile device.
 Bank Pre-Paid Card – Under the motto “Pay Now, Use Later,”
the pre-paid cards allow users to buy things with funds available
in their cards.
 Point of Sale – Point of Sale (PoS) is a technological instrument
provided by a Merchant Establishment (ME) to carry out the
sale of goods or services to customers in a cashless
environment.
  Internet Banking – This is an online banking method that
enables customers of a bank or financial institution to carry out
transactions through a portal.
 Mobile Banking – This is a service provided by banks and
financial institutions to carry out financial transactions through a
mobile device.
 Micro ATM – These are portable devices allowing banking
transactions through card swipe machines.

In order to transform India into a digitally empowered society and

knowledge economy, the Government of India launched Digital India
programme in 2015. The programme focuses on three main vision
areas: digital infrastructure as a core utility to every citizen,
governance and services on demand, and digital empowerment of
citizens. Through the programme, the government wants to ensure the
availability of high-speed Internet, provide mobile phones and bank
accounts to every citizen, ensure availability of services in real-time
from online and mobile platforms, make financial transactions
electronic and cashless, and ensure digital literacy and availability of
digital resources across the country.
IMPACT OF COVID 19 PANDEMIC ON ONLINE PAYMENT
SYSTEM

The COVID-19 pandemic has spurred financial inclusion – driving a

large increase in digital payments amid the global expansion of
formal financial services. This expansion created new economic
opportunities, narrowing the gender gap in account ownership, and
building resilience at the household level to better manage financial
shocks, according to the Global Findex 2021 database. 
As of 2021, 76% of adults globally now have an account at a bank,
other financial institution, or with a mobile money provider, up from
68% in 2017 and 51% in 2011. Importantly, growth in account
ownership was evenly distributed across many more countries. While
in previous Findex surveys over the last decade much of the growth
was concentrated in India and China, this year’s survey found that the
percentage of account ownership increased by double digits in 34
countries since 2017.
The pandemic has also led to an increased use of digital payments. In
low and middle-income economies (excluding China), over 40% of
adults who made merchant in-store or online payments using a card,
phone, or the internet did so for the first time since the start of the
pandemic. The same was true for more than a third of adults in all
low- and middle-income economies who paid a utility bill directly
from a formal account.  In India, more than 80 million adults made
their first digital merchant payment after the start of the pandemic,
while in China over 100 million adults did. 
Two-thirds of adults worldwide now make or receive a digital
payment, with the share in developing economies grew from 35% in
2014 to 57% in 2021. In developing economies, 71% have an account
at a bank, other financial institution, or with a mobile money provider,
up from 63% in 2017 and 42% in 2011. Mobile money accounts
drove a huge increase in financial inclusion in Sub-Saharan Africa.
“The digital revolution has catalyzed increases in the access and use
of financial services across the world, transforming ways in which
people make and receive payments, borrow, and save,” said World
Bank Group President David Malpass. “Creating an enabling
policy environment, promoting the digitalization of payments, and
further broadening access to formal accounts and financial services
among women and the poor are some of the policy priorities to
mitigate the reversals in development from the ongoing overlapping
crises.”
For the first time since the Global Findex database was started in
2011, the survey found that the gender gap in account ownership has
narrowed, helping women have more privacy, security, and control
over their money. The gap narrowed from 7 to 4 percentage points
globally and from 9 to 6 percentage points in low- and middle-income
countries, since the last survey round in 2017. 

Despite the advances, many adults around the world still lack a
reliable source of emergency money. Only about half of adults in low-
and middle-income economies said they could access extra money
during an emergency with little or no difficulty, and they commonly
turn to unreliable sources of finance, including family and friends.
GRAPHICAL REPRESENTATION OF DATA OF

TRANSACTIONS TOOK PLACE IN LAST FEW YEARS:

SWOT Analysis of Internet Banking
 
The following are the strength, Weakness opportunists and
threats of Internet Banking in India
 

Strengths
 
Ø  Aggression towards development of the existing standards of
banks
Ø  Strong regulatory impact by central bank to all the banks
Ø  Presence of intellectual capital to face the change in
implementation with good quality
Ø  Fully computerized and techno savvy
Ø  A person can access his account from anywhere he is
Ø  A person can do banking transactions like funds transfer to any
account, book ticket, bill pay at any time of the day
 

Weaknesses
 
Ø  High bank service charges. All the bank charges highly to the
customers for the services provided through internet banking
Ø  Poor technology infrastructure
Ø  Ineffective risk measures
Ø  Easy Access of internet banking account by wrong people through
email ids
Ø  When the server is down the whole process is handicapped
 
Opportunities
 
Ø  Increasing risk management expertise
Ø  Advancement of technologies, strong asset base would help in
bigger growth
Ø  Safety of using internet banking is robust, so more internet banking
users in future
Ø  The international scope of internet banking provides new growth
perspectives and internet business is a catalyst for new
technologies and new business processes
 
Threats
 
Ø  Banks provides all services through electronic computerized
machines and this creates problems to the less educated people
Ø  Inability to meet the additional capital requirements
Ø  Huge investment in technologies
Ø  Internet banking will be replaced by mobile banking
 
Inference of SWOT Analysis
 
With the growth of internet at a rapid pace and the people’s time
constraints, internet banking is used widely used for all the banking
transaction purpose all over the world. Banking working hours is not
limited to internet banking as the banking account can be accessed
throughout the day.
 
ONLINE BANKING MARKET:

With changing consumer demands, lifestyle, and expectations toward

banking, the banks are largely switching toward internet or digitalized
banking by implementing technologies. In addition, cloud computing,
application programming interfaces (APIs), robotic process
automation (RPA), chatbots, machine learning, and blockchain are the
major technologies that accelerate the online banking market growth.
Moreover, real-time payment solutions, convenience, & easier options
to access online banking and increased usage of smartphones drive
the growth of the online banking market.

The payments segment dominated the online banking industry in 2019

and is projected to maintain its dominance during the forecast period.
Due to huge number of consumers shifting towards online payment
platforms, as it provides more convenience and time-saving features
as compared to the conventional methods of payments in the market. 

The report focuses on growth prospects, restraints, and trends of the

online banking market analysis. The study provides Porter’s five
forces analysis to understand the impact of various factors such as
bargaining power of suppliers, competitive intensity of competitors,
threat of new entrants, threat of substitutes, and bargaining power of
buyers on the online banking market.

Segment review
The online banking market is segmented on the basis of service
type, banking type, and region. By service type, it is classified into
payments, processing services, customer & channel management,
wealth management, and others. In terms of banking type, it is
divided into retail banking, corporate banking, and investment
banking. Region-wise, the market is analyzed across North America,
Europe, Asia-Pacific, and LAMEA.
 Online Banking Market
B
y Service

COVID-19 impact analysis

In the COVID-19 pandemic situation, the online banking market has
witnessed significant growth and recorded continuous development
globally. In addition, consumers have been largely availing banking
services online via mobile phones and web browsers, owing to the
global fear of the virus and maintain social distancing. Therefore, the
changing patterns of consumers toward online banking services have
accelerated the growth of the online banking market. Furthermore,
online banking experienced a positive impact of COVID-19, and is
expected to maintain its dominance during the forecast period. 

Top impacting factors

Increased smartphone usage & internet penetration   
With increase in emphasis on smartphone usage and massive internet
penetration across several countries, the demand for online banking is
continuing to rise, and is expected to maintain its dominance in the
market. In addition, customers are using online banking more
frequently as banks are providing real-time payment solutions,
allowing regular banking transactions online, features of bill
payments, and others. Furthermore, the banking industry has
witnessed massive expansion & standardization in terms of products
& services offered via mobile application and increased brand loyalty
among consumers, thereby propelling the online banking market
growth.
Online Banking Market

By Banking Type
HERE’S A LIST OF QUESTIONS WHICH I ENCOUNTERED
WHILE COLLECTING INFORMATION:

What is the market share of Online Banking Market?

The market share is 13.6% from 2020 to 2027.

What factors are anticipated to drive Online Banking Market

trends?

The increase in number of internet users, growing customer

convenience and better rates of interest are driving the online banking
market growth.

Who are the potential customers of Online Banking Market?

The potential customers of online banking are individuals, corporates,
and others.

Which are the leading players in Online Banking Market?

Microsoft Corporation , Fiserv, Inc. , ACI Worldwide , and Infosys
Limited are the leading players in online banking market

What are the key growth strategies of Online Banking industry

players?
The key growth strategies of online banking market players are
merger and acquisition, product launch, and joint-venture.

How large is the target market?

The online banking market is expected to reach $31.81 billion by 2027