Digitalisation of Banking – Digital Payment System Commerce YouTube Lecture Handouts Part 2

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Digitalisation of Banking – Digital Payment System | Commerce

Digital Payment Platforms

Digital Payment Platforms

National Payments Corporation of India (NPCI)

  • Considering the utility nature of the objects of NPCI, it has been incorporated as a “Not for Profit” Company under the provisions of Section 8 of Companies Act 2013, with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems.
  • The Company is focused on bringing innovations in the retail payment systems through the use of technology for achieving greater efficiency in operations and widening the reach of payment systems.
  • An umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks՚ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.

Products Offered by National Payments Corporation of India (NPCI)

Products Offered by National Payments Corporation of India

RuPay

  • It is the first-of-its-kind domestic Card payment network of India, with wide acceptance at ATMs, POS devices and e-commerce websites across India.
  • It is a highly secure network that protects against anti-phishing. The name, derived from the words ‘Rupee’ and ‘Payment,’ emphasizes that it is India՚s very own initiative for Card payments.

National Automated Clearing House (NACH)

  • For Banks, Financial Institutions, Corporates and Government a web-based solution to facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature.
  • NACH System can be used for making bulk transactions towards distribution of subsidies, dividends, interest, salary, pension etc. and also for bulk transactions towards collection of payments pertaining to telephone, electricity, water, loans, investments in mutual funds, insurance premium etc.

Immediate Payment Service (IMPS)

  • For transferring funds real time and interbank was a major challenge faced in banking industry.
  • Only NEFT & RTGS were available to user for fund transfer during banking hours.
  • IMPS provides robust & real time fund transfer which offers an instant, , interbank electronic fund transfer service that could be accessed on multiple channels like Mobile, Internet, ATM, SMS.
  • IMPS is an emphatic service which allow transferring of funds instantly within banks across India which is not only safe but also economical.

National Financial Switch (NFS) ATM

  • The network has grown many folds and is now the leading multilateral ATM network in the country.
  • NFS has introduced sub-membership model which enables smaller, regional banks including RRBs and local co-operative banks to participate in the ATM network.
  • NPCI has also tied up with international card schemes like
    • Discover Financial Service (DFS) ,
    • Japan Credit Bureau (JCB) and
    • China UnionPay International (CUPI)
    • which allows their cardholders to use ATMs connected to NFS network.
  • The Fraud Risk Management (FRM) solution is offered as a value-added service to monitor transactions (in real time) and to generate alert or decline the transaction in the NFS network
  • Apart from basic transactions like Cash Withdrawal, Balance Enquiry, PIN Change and Mini Statement, NFS also offers other Value-Added Services (VAS) on ATMs/CDMs like:
    • Interoperable Cash Deposit (ICD) ,
    • Mobile Banking Registration (MBR) ,
    • Card-to-Card Fund Transfer (C2C) ,
    • Cheque Book Request (CBR) ,
    • Statement Request (SR) ,
    • Aadhar Number Seeding (ANS) ,
    • Interoperable Cash Deposit (ICD) .

National Electronic Toll Collection (NETC) Program

  • To meet the electronic tolling requirements of the Indian market.
  • It offers an interoperable nationwide toll payment solution including clearing house services for settlement and dispute management.
  • Interoperability, as it applies to National Electronic Toll Collection (NETC) system, encompasses a common set of processes, business rules and technical specifications which enable a customer to use their FASTag as payment mode on any of the toll plazas irrespective of who has acquired the toll plaza.
  • FASTag offers the convenience of cashless payment along with benefits like - savings on fuel and time as the customer does not has to stop at the toll plaza.

MCQs

Q. NETC stands for ________.

Answer: National Electronic Toll Collection

Q. Unstructured Supplementary Service Data (USSD) allows users without a smartphone or data/internet connection to use mobile banking through the ________code.

Answer: 99#

Q. Name any 5 digital products offered by NPCI.

Answer: Rupay, NACH, NFS, NETC, IMPS, UPI, BHIM, 99#, AePS, Bharat Bill Pay, Cheque Truncation System (CTS) .

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