Internet Banking: Meaning, Features, Advantages and Disadvantages

Internet Banking

Internet banking, also known as Online banking or Net banking, is an electronic payment system that allows a bank or financial institution to conduct financial or non-financial transactions.

This service provides online access to almost all banking services, which are traditionally available through a local branch, including online money transfers, deposits, and customer account payments.

Internet banking services are accessible to anyone who has applied for Internet banking services from a bank, has an active bank account, or has a financial institution.

After registering for Internet banking, the customer does not have to go to the bank every time they want to use it. It is not only favourable but also a safe way to get to the bank. Unique user IDs and passwords protect internet banking portals.

Table of Contents

Features of Internet Banking

The features of Internet banking include:

  • Provides access to financial and non-financial banking services.
  • Just check the bank balance anytime
  • Pay your bills and transfer funds to other accounts
  • Connect control of mortgages, loans, savings to a bank account
  • Safe and secure banking services
  • Protected by a unique username and password
  • Customers can request a checkbook
  • Buy general insurance
  • Set or cancel automatic recurring payments and standing orders

Types of Money Transfer via Internet Banking

There are three types of money transfers that can be done through Internet Banking.


National Electronic Funds Transfer (NEFT) is a payment system that enables the transfer of individual funds.

  • In addition to NEFT, natural and legal persons can electronically transfer funds from any bank branch to any legal person who has an account in another branch of the bank in the country.
  • The NEFT service is available 24 hours a day, seven days a week, in Internet banking. But this is a limited-time service at a bank branch.
  • Usually, the NEFT transfer is completed successfully within 30 minutes. However, the time can even be extended to 2-3 hours or completed in just 10 minutes.


Real-time gross settlement (LBTR) is the continuous settlement of assets individually in succession.

  • This payment system ensures that the funds are credited to the user’s account almost immediately and not after a certain period, as is the case with other payment methods such as NEFT.
  • LBTR transactions are monitored by the RBI, so successful transfers cannot be returned. This method is mainly used for high-value transfers.


Another payment method that transfers funds in real-time is the Direct Payment System (IMPS).

  • IMPS is used for instant transfer of funds within Indian banks via mobile devices, Internet, and ATMs, which is not only secure but also cheap and non-financial.
  • IMPS is an inexpensive way to transfer funds. Other ways to share money like NEFT and RTGS charge much more than IMPS
  • They don’t need details like account number, IFSC code, etc. Funds can only be transferred via IMPS with the recipient’s mobile number.

How to Register for Internet Banking?

Each account holder must register with an Internet banking service at their bank to access it. Most banks offer the option to register online when you open a new account.

To start using Internet banking, follow these steps:

  • Download the app form from the bank’s official website, fill it out, and create an impression. You can also visit the bank and fill out an Internet banking form.
  • Submit a bank request form
  • After verification, you will be sent a unique user ID and password to log in to Internet banking.

Advantages of Internet Banking

Internet Banking

The advantages of Internet Banking include:

  • Availability: You can use Internet banking services all year round. Most of the services offered have no time limit; You can check the account balance and transfer funds without waiting for the bank to open.
  • Simple Handling: using the services offered by Internet banking is simple and easy. Many find that an online transaction is much easier than going to a branch to get it.
  • Convenience: you don’t have to quit chores and wait in the bank branch. You can carry out your transactions wherever you are. Pay utility bills, recurring deposit account fees, and more with Internet banking.
  • Save Time: You can complete any transaction in minutes through Internet banking. Funds can be transferred to any account in the country or open a fixed deposit account in Internet banking.
  • Activity Tracking: When you make a transaction at a bank branch, you will receive an acknowledgment of receipt. There is a chance you will lose it. Instead, all the transactions you make on the bank’s Internet banking portal will be recorded. If necessary, you can show it as proof of the transaction. Details such as username, bank account number, the amount paid, date, payment time, and comments will also be recorded.
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Disadvantages of Internet Banking

The Disadvantages of Internet Banking include:

  • Internet Requirement: An uninterrupted Internet connection is an essential requirement for using Internet banking services. If you do not have any Internet access, you cannot use the services offered online. Likewise, if your bank’s servers are down due to technical issues on your part, you will not be able to access Internet banking.
  • Transaction Security: No matter how many precautionary measures banks take to ensure a secure network, Internet banking transactions are always vulnerable to hackers. Regardless of the advanced encryption methods used to protect user data, there have been cases where transaction data has been compromised. This can pose a significant threat, such as the illegal use of data in favor of hackers.
  • Difficult for Beginners: Some people live far from the Internet. Understanding how Internet banking works can seem like a whole new job. Worse, if no one can explain how Internet banking works, and how it works, how to do it. Inexperienced beginners will find it very difficult to figure it out on their own.
  • Secure Password: All online bank accounts require a password to access services. Therefore, a password plays a crucial role in maintaining integrity. If they reveal the password to others, they can use that information to fabricate fraud. Besides, the chosen password must respect the rules established by the banks. People have to change passwords frequently to avoid password theft, which can be difficult for the account holder themselves.
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