How India's Payment Systems Have Transformed Over Time

The Evolution of Payment Methods in India: Series 1 




In-Person Banking to nearby banking:-  

Payment methods have come a long way since the early days of banking, when making deposits and withdrawals at a physical bank was the only option. The evolution of these methods has transformed our financial system, making transactions more seamless, accessible, and time efficient.

  

Banking in the Early Days:-  

In the not-so-distant past, we would have to go to a bank to conduct financial transactions physically. This process was time-consuming and often involvedwaiting in long queues. There were separate lines for deposits and withdrawals, with the latter often seeing higher demand. After all, people needed to take money out to facilitate their daily transactions, which meant they had to carve out substantial time from their day for a simple banking chore. Imagine a customer living in a village and their bank located 15-20 km from their location, the cost, and the time incurred in cash withdrawal.  

 

Introduction of Debit Cards  

Times were changing, and banks introduced new reforms to make transactions seamless. The introduction of debit cards was one of the game-changer moments. These cards transformed the banking experience, reducing bank queues and allowing customers to access their money on their terms. However, this newfound convenience came with its challenges. Consumers were uncomfortable using the cards as they had to remember the PIN and needed to be more conversant with using it online, as it required multiple steps to complete the transaction, e.g., Name of person, Expiry date, CVV, etc. The one fundamental purpose of the card was to enable customers to withdraw money from ATMs  

Furthermore, it was initially impossible to withdraw money from one bank's ATM using another bank's card. This was due to the lack of interconnectivity between different banks' ATMs, causing inconvenience for customers who had to seek out their own bank's ATMs for transactions; For example, if you

owned a HDFC bank debit card 20 years ago and you lived in a locality where there existed only SBI bank ATMs, you wouldn't have been able to go to the SBI ATM to withdraw cash as you had opened an HDFC Bank ATM. The only way to access your money would be to go to an HDFC ATM, wherever it may be, and the time and cost taken for a customer would be humongous!  

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