Paying and being paid

Payment systems are another key part of financial infrastructure: they move money from one person to another. (A payment system is a way of clearing and settling money transactions.)

Getting cash. You can fill in a withdrawal slip at the bank and collect cash at the counter. Or use a debit card at an ATM (Automated Teller Machine) — a self-service 'mini-bank' open 24×7 at bus depots, markets, stations, airports and malls: insert the card, enter your PIN, type the amount, take the cash. A PIN is a secret number code (usually 4 to 6 digits) that proves it's you.

Cheques. A cheque is a paper that lets you pay someone from your account. To pay your friend Rohan ₹5,000, you write the amount, Rohan's name and your signature. Rohan deposits it in his bank; the money is debited from your account and credited to his.

But cheques need a visit to the bank and take time. Electronic payments are instant.

Electronic ways to pay:

• Debit card at a POS machine in a shop — swipe or insert, enter the amount and PIN; the money leaves your account at once.
• Internet banking — check your balance and transactions and transfer money on the bank's website or app.
• Mobile payments — apps like BHIM, using UPI (Unified Payments Interface), send money instantly using a QR code or the receiver's phone number.

Why did UPI matter so much? Paying through banks used to mean cheques and forms, which was slow and put most people off. So people relied on cash, and billions of rupees changed hands every day with no record.

That changed in 2016, when the National Payments Corporation of India (NPCI) launched UPI. Follow one payment: Kumar scans vegetable seller Piyush's QR code, types the amount and his UPI PIN; the app sends the request to Kumar's bank; the bank passes it to NPCI; NPCI checks the PIN and processes the transfer; Piyush's bank receives the money — all in seconds.

During the COVID-19 pandemic, when people had to keep their distance, UPI became even more popular for cashless payments, and it works in many languages so everyone can use it. It has also travelled abroad: Nepal was the first country to adopt India's UPI, in 2022, and today the UAE, France, Sri Lanka, Bhutan, Mauritius and others use it — India's gift to the world of payments!