Why is Net banking cheaper?
Facilities like online and mobile banking drastically cut down the cost of providing a service. This saving is passed on to customers who are willing to go beyond the traditional banking channels. ”
A bank branch has to
incur cost for stationery,
in setting up the office,
paperwork eats up valuable man hours.
If the customer uses the online option,
a bank hardly incurs any cost, which benefits the former.
According to industry experts, a bank spends an average of Rs 40 for each transaction conducted
at a branch. If a customer uses the ATM facility, the cost drops to Rs 18-20 per transaction, but
it is still much higher than the cost involved in online banking. “In order to promote Net banking, the financial institutions offer certain services for free or charge a nominal amount,” says Ramesh, Banker
Why the cost differential
As per Norms,Banks across the world are within their rights to charge for any service for which they incur a cost. Now,this is being practised by Indian banks as well.
“Only if a bank doesn’t incur any cost in completing a transaction will it refrain from charging the customer,”.
In fact, the RBI has not restricted any bank from charging a fee for such transactions. “If you deposit a physical cheque from another bank and it is credited to your account, both banks incur a cost, but you are not charged anything. In the long run, the banks need to recover this amount to sustain themselves.
“The RBI restricts unreasonable charges. If the fee is within permissible limits and the bank can justify it, it can deduct this from their customers’ account.
To keep abreast of the paid services and differential pricing, all you need to do is to visit your bank’s website.Moreover, the details of services and respective fees will be posted on the notice board in every bank branch. Net banking also helps save money in other ways. For instance, if you have opted for the facility to pay bills online,you can skip the late payment fee.
In addition, there are service providers like credit card issuers, who charge a fee for branch payments. Some banks also offer bonus points for online services, which can then be redeemed for online shopping through the bank’s partner.
Consider the ICICI Bank’s Payback facility and State Bank of India’s Loyalty Rewards programme.
Safety vs savings
The benefits of Net banking notwithstanding, a lot of people balk at availing of this option because of the concerns about the security of online transactions, especially in an age where phishing and online fraud is on the rise.
Bankers however, counters this, saying that Internet banking is probably safer than physical transactions. “Banks have introduced a double authentication system, which makes Net banking much safer,
According to Banks, each customer is given a unique password to log into his account.
To complete any transaction, he needs to key in an ID sent via SMS to his registered mobile number. “So it is not possible to go wrong. It’s highly unlikely that any other person, even a fraudster, could have both the unique log in/password and the registered mobile number.
Incidentally, you don’t get any security assurances while transacting physically at the bank.