Which Digital Payment Method is Right for You?

8 MinsJanuary 27, 2020

While we’re still not an entirely cashless economy, digital payments have grown at an unprecedented rate in recent times. Better connectivity and a persistent push from the government has helped the adoption of digital payments in the country. However, due to the number of options available, it might get a bit confusing to pick a particular mode of digital payment for your needs. In this article, we’ll take a look at all the modes available, their particular features, restrictions, and benefits, to make that choice a bit easier.

digital payment

Banking cards

Essentially, there are two types of cards:

  • Debit Cards: These cards are used to transact digitally using the balance in your bank account directly.
  • Credit Cards: These cards come with a pre-approved credit limit, which can be availed and then repaid once the bill or statement is generated. The credit limit is based on your credit rating and other factors.

Both types of cards can be used physically at stores, as well as on payment gateways and digital payment apps or websites.


  • Multiple e-commerce portals support EMI through Credit and Debit Cards for high-value purchases. This is because most banks allow you to convert major credit card transactions to EMI for easier monthly payments.
  • Certain cards provide benefits such as instant discounts on particular types of transactions.
  • Cards also accumulate points for all types of spending and allow you to redeem them for various rewards.

Restrictions: The transaction limit on cards varies between banks as well as card grades or categories.

Who is it right for: Pick cards if you’re looking to make payments in-store or avail EMI online.


  • For an existing account, you can apply for an associated debit card online or at the bank branch.
  • A credit card can also be availed online or from a bank branch. You don’t need to have a bank account at the same bank to avail a credit card.

Charges: Debit cards are usually provided free-of-cost with a bank account. Depending on the category of card, both debit and credit cards might charge an annual fee, which is often waived off if a certain amount of spending is achieved.

Example: Debit and Credit Cards from Axis Bank.

National Electronic Fund Transfer (NEFT)

As per RBI, with NEFT, any amount can be transferred to a recipient’s account with no daily limit. There can be bank-level regulations, however, Axis Bank has no such restrictions.

Restrictions: Timings: This method is available 24x7 from 16 December 2019 onwards, but transactions are processed in half-hour batches and completed within two hours.

Who is it right for: Go for NEFT if you aim to transfer amounts less than Rs 2 lakh and don’t need it done immediately, or if you need to make a transfer greater than Rs2 lakhs beyond the operational hours of RTGS.


  • Add recipient as a beneficiary in the bank account, for which you’ll require their bank account and IFSC code.
  • The bank branch should be a part of the scheme (check here).

Charges: There are no charges on NEFT when initiated online.

Example: NEFT from Axis Bank has no transaction limits, except for transfers where cash is the source.

Real-time gross settlement (RTGS)

Intended for large value transactions, RTGS provides instantaneous credit facility for transfers above two lakhs, as long as those transfers are executed within RTGS working hours. According to RBI, the RTGS service window for customer transactions is available to banks from 7 am to 6 pm.

Restrictions: Since this payment type is meant for large value transactions, it carries a minimum requirement of Rs2 lakh per transaction, with no upper limit.

Who is it right for: Select RTGS if your transfers will be larger than Rs 2 lakh and require immediate settlement.

Requirement: RTGS also requires you to add the beneficiary in net banking.

Charges: There are no charges on online RTGS transactions.

Example: RTGS from Axis Bank operates on the standards set by the RBI, which means that the maximum time of 30 minutes can pass within which the beneficiaries' account has to be credited.

Immediate Payment Service (IMPS)

IMPS makes it easy to transfer comparatively lower amounts any time, 24x7, even on bank holidays. Publicly launched almost 9 years ago, IMPS has been developed by NPCI (National Payments Corporation of India).


  • For IMPS, restrictions are decided by the bank and not implemented universally. But by and large, there is a cap of Rs2 lakh per transaction.
  • The first time a beneficiary is registered, a bank may not allow transfers up to 30 minutes to the new beneficiary. Post that, all transfers to that beneficiary are instant.

Who is it for: For instant settlements of transfers under Rs 2 lakh, go for IMPS if you don’t mind paying a small fee per transaction.

Requirements: IMPS can be carried out by adding a beneficiary. It can also be carried out if you’re aware of the receiver’s bank account details, IFSC Code or MMID as a one-time transfer without adding the beneficiary.

Charges: IMPS charges can vary between banks. For Axis Bank, they are as follows (taxes extra):

  • Up to Rs 1000: Rs 2.50 per transaction
  • Rs1,000 to Rs 1,00,000: Rs 5 per transaction
  • Rs 1,00,000 to Rs 2,00,000: Rs 15 per transaction

Example: IMPS from Axis Bank.

Unified Payments Interface (UPI)

Built as a layer over the IMPS platform, the UPI mode creates a UPI ID, also known as Virtual Payment Address (VPA), and links it to the bank account. This method supports two-way transactions – meaning, it allows you to make payments as well as request payments. This method has been extremely popular ever since its launch in April 2016. Monthly transactions have been steadily growing ever since it was introduced and have crossed 120 crores in Nov 2019 alone. Tech giant Google has even recommended the US Federal Reserve to replicate the model in the United States.


  • Since bank account number or mobile number doesn’t have to be shared, user privacy is maintained.
  • Multiple bank accounts and their associated VPAs can be brought under the same UPI app. The app can also be from a third party (not necessarily a bank). This allows you to choose the UPI app that provides the experience that you like, e.g. BHIM Axis Pay.

Restrictions: Transactions as low as Rs 1 can be made. On BHIM Axis Pay, the maximum transaction limit is Rs. 1 lakh per day and per transaction, which is the same as the UPI platform itself.

Who is it for: UPI is the right pick for transactions within Rs1 lakh, be it payments at stores or quick and easy peer-to-peer settlements of things like, say, a restaurant bill being split among friends.

Requirements: Using a UPI app, a VPA needs to be created and linked to a bank account. This UPI ID can be used on most modern payment gateways. It can also be used on other UPI apps to generate payment requests.

Charges: With low transaction charges from NPCI, multiple banks provide UPI without any charges, which includes Axis Bank.

Example: BHIM Axis Pay UPI App from Axis Bank comes with an easy to use interface, and it is interoperable with all the popular UPI apps.

Also Read: [Use the UPI App in 4 Easy Steps]


Mobile wallets, online wallets, or e-wallets are the digital counterparts to your physical wallets. You can add money to them, and then use them for various purposes like recharges, bill payments, ticket bookings, and even wallet-to-wallet transfers.


  • e-wallets offer one click payment options for small ticket payments making them simpler.
  • e-wallets often offer cashbacks and discounts that can make payments cheaper.

Restrictions: As per RBI regulations, balance and payment restrictions have been imposed on minimum KYC wallets. Most restrictions are lifted once Full KYC is completed by submitting required documents for in-person verification.

Who is it for: If you want to keep a fixed amount of money accessible easily and to avail interesting offers, pick e-wallets.

Requirements: You need to download a wallet app of your choice and load money from a bank account.

Charges: e-wallets can charge you for transferring money back into your bank account.

Example: Freecharge is an e-wallet that offers several features on-the-go. It allows you to make bill payments, recharges, and sending money via UPI, payment at merchants using UPI, MF investments, gold purchases, gift card purchases etc. It even gives you the options to avail deal coupons across ecommerce partners.

Which one is right for you?

Most of us use a combination of these methods daily. For instance, cards are useful for paying at retail stores, and can also be used online. UPI is currently gaining popularity, especially through QR codes that are supported by multiple UPI apps. Methods like NEFT and RTGS allow you to transfer larger amounts. Mobile wallets are highly useful on a day-to-day basis with increasing acceptance even at the smallest of vendors. Overall, there’s a payment method for everyone and every requirement, and perhaps more are on their way soon. In either case, picking the right method can make your payments, and in turn your life, seamless.

Disclaimer: This article has been authored by Siddharth Parwatay, a Mumbai based independent tech-journalist, editor, and content-creator. Axis Bank doesn't influence the views of the author in any way. Axis Bank and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.