DIGITAL PAYMENT SYSTEMS | PPB IMPORTANT NOTES | JAIIB EXAM 2024 PREPARATION

DIGITAL PAYMENT SYSTEMS | PPB IMPORTANT NOTES 2024

In this article, we’ll read about the Digital payment systems in India, some of the important electronic clearing systems like ECS, RTGS, CTS, IMPS, UPI, NACH, Government Securities, Forex Clearing, Credit Cards, Debit Cards and PPIs.

NPCI (National payments corporation of India)

The National Payments Corporation of India (NPCI), a government-owned company, has revolutionised digital payment systems in India by enhancing the usability, security, and convenience of online transactions.

State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank, and HSBC are among its ten primary promoter banks. NPCI was established as a “not-for-profit” corporation in 2013.

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NPCI manages the following payment products/systems:

1. NFS (National Financial Switch) 
2. NACH
3. BHIM (Bharat Interface for Money)
4. UPI (Unified Payments Interface)
5. IMPS (Immediate Payment Service)
6. AEPS (Aadhaar Enabled Payment System)
7. BBPS (Bharat Bill Payment System)
8. Bharat QR
9. NCMC (National Common Mobility Card)
10. Rupay Cards
11. NETC (National Electronic Toll Collection)

NATIONAL FINANCIAL SWITCH (NFS)

NFS is India’s largest shared ATM network, created and implemented by the IDRBT in 2004. On December 14, 2009, NPCI took over the operation from IDRBT. NFS provides basic services such as Cash Withdrawal, Balance Inquiry, PIN, Change, and Mini statements. 

It also offers value-added services such as Interoperable Cash Deposit, Mobile Banking Registration, Card-to-Card Money Transfer, Cheque Book Request, Statement Requests, and Aadhaar Number Seeding.

NACH (NATIONAL AUTOMATED CLEARING HOUSE)

For banks, financial institutions, corporations, and the government, NACH is a web-based solution that enables interbank, high-volume, repeated and periodic electronic transactions.

IMPS (IMMEDIATE PAYMENT SYSTEM)

IMPS is a reliable electronic funds transfer mechanism for instant payments between banks in India, accessible via mobile, internet, ATMs, and SMS. It is accessible every day of the year, including holidays.

The National Financial Switch (NFS) network that already exists provides the foundation for IMPS, which is maintained by the NPCI. Banks must hold an active Reserve Bank of India licence for prepaid payment instruments or banking to participate. 

The Payment and Settlement System Act of 2007 established procedural rules, which apply to all IMPS members. Interbank electronic fund transfers are instant and available around-the-clock through IMPS, which offers many access points.

The objectives of the project are to enable secure and safe mobile payment system interoperability between banks and mobile operators, enable customers to use mobile devices as a channel, simplify the payment process, assist the Reserve Bank of India in digitising retail payments, and lay the groundwork for a broad array of mobile-based banking services.

Money can be sent instantaneously, seven days a week, safely, conveniently, and affordably. It is independent of the channel and can be started from a branch, mobile device, computer, ATM, or another channel. Both the sender and the receiver receive an SMS confirmation for successful transactions.

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REGISTRATION FOR REMITTER/ RECEIVER

Download the mobile banking programme, sign up for the bank’s mobile banking service, and request an MPIN and Mobile Money Identifier (MMID) from them. Although every MMID is associated with a different Mobile Number, many MMIDs can share a single Mobile Number. IMPS transactions are settled between banks using settlement cycles.

AUTHENTICATION

You can start an IMPS transaction through a mobile device, an ATM, or an Internet banking channel. Customers who send money over the ATM channel will be authenticated using their card and ATM PIN. User ID, Internet Banking Password, and Transaction Password are used for Internet banking channel authentication. All channels will employ a suitable two-factor authentication method that is already in place. When sending money through one of these channels, the bank’s limit will be in effect. It is not necessary to register to become a remitting customer.

UPI (UNIFIED PAYMENTS INTERFACE)

One of the most well-known and commonly utilised real-time digital payment systems in India is called UPI (Unified Payments Interface), which enables customers to send money immediately and securely from one bank account to another using their mobile devices.

The Unified Payments Interface (UPI), a smartphone app, connects several bank accounts, straightforward fund routing, and merchant payments.

Also, it supports “Peer to Peer” collection requests, which may be planned and paid for according to need and convenience. 

Using a single mobile application to access multiple bank accounts, UPI enables real-time money transfers using mobile devices 24/7/365. 

Only mobile numbers that have been registered with the issuer bank for SMS alerts or mobile alerts are eligible for mobile banking registration. 

Consumers must first download the UPI programme from the banks’ website, the App Store, or the Play Store, establish a profile, link their bank account and account number with the virtual id, and generate.

FINANCIAL TRANSACTIONS

Financial transactions include Pay Request and Collect Request. Pay Request involves pushing funds to the intended beneficiary, while Collect Request involves pulling funds from the intended remitter. Payment Addresses include Mobile Number, Account Number, IFSC and Virtual ID.

NON-FINANCIAL TRANSACTIONS

•       Mobile Banking Registration
•       Generate One Time Password (OTP)
•       Set/ Change PIN
•       Check Transaction Status
•       Raise Dispute/Raise a query

UPI provides Pull functionality to request money, simplifies Merchant Payments, and facilitates transactions through single-click two-factor authentication. It also allows multiple bank accounts to be linked to the same virtual address depending on the PSP’s functionalities.

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UPI 2.0

Customers can pre-authorize a transaction and block the funds in their account for a later debit using the UPI 2.0 One Time Mandate with Block Feature. 

The mandate is digitally signed and kept with the customer’s PSP bank and account holding bank (app-providing bank). Both the customer’s PSP bank and the bank holding the customer’s account must validate the digital signature and check the parameters during the debit. 

Clients who are approved by their bank for an OD may additionally link an overdraft account. Consumers can use a secure link they received in the collect/intent message to check/verify the invoice or attachment before authorising the payment. Security is offered via Signed Intent & QR while the customer is making a purchase. This choice will lessen problems with OR manipulation and the presence of unverified entities.

BHIM

BHIM is India’s one of the most well-known mobile app-based digital payment systems (Bharat Interface for Money), which allows customers to conduct quick, safe transactions via their smartphones while also offering a streamlined and uniform platform for all of the nation’s major banks.

The BHIM app uses the Universal Payments Interface to allow users to make simple, quick, and effortless payments (UPI). It offers functions including receiving payments by entering the Virtual Payment Address (VPA), Account Number & IFSC, Aadhaar Number, or QR code, sending payments using a Virtual Payment Address (VPA), and transferring funds using a mobile number. (Mobile No. must be linked to the account and registered with BHIM or *99#).

Moreover, the user has the option to review transaction history and approve or reject any pending UPI collect requests. The user can also see static QR codes, set payment addresses, and share QR codes using different messenger programmes. The user can also change their bank account linked with the BHIM App and check their balance.

The app supports 20 regional languages, and the user can block/spam users who are sending requests from illicit sources. The user can also schedule payments at their convenience, split bills with multiple UPI users at a click of a button, apply for any IPO using BHIM, and enable recurring e-mandates for recurring payments. 

BHARAT BILL PAYMENT SYSTEM (BBPS)

The BHARAT BILL PAYMENT SYSTEM (BBPS) is a one-stop ecosystem for paying all bills that offers a reliable, secure, and interoperable “Anytime, anywhere” bill payment solution to all clients throughout India. 

It offers a variety of payment options and immediate payment confirmation through SMS or receipt. The BBPCU is in charge of establishing the technical and business requirements for all participants, as well as the business standards, regulations, and processes. The Reserve Bank of India has sanctioned the BBPOU, which can be either a bank or a non-bank. 

Customers can engage with the system and obtain services at the agent institutions of the BBPS Pay ecosystem, which include agent outlets, Business Correspondent outlets, bank branches, collection centres, and retail outlets. Service providers include bilUtility providers and billers are service providers.

BHARAT QR

The NPCI, Visa, and MasterCard payment networks have joined forces to create the BHARAT QR P2M (Person to Merchant) mobile payment system. With BQR-enabled mobile banking apps, users can pay their utility bills at BQR registered Merchant locations without giving the merchant any user credentials. 

The code is more frequently used and safe than other QR codes since it contains additional data elements including the merchant’s name, address, and bank information. Any card payment method, including RuPay, Visa, MasterCard, and Amex, is available to users. 

RUPAY

To realise RBI’s aim of providing a domestic, open-loop, multilateral system that will enable all Indian banks and financial institutions in India to engage in electronic payments, NPCI established the RuPay card payment programme. 

It provides fantastic advantages and benefits, including lower prices and accessibility, individualised product selections, data protection for Indian consumers, and electronic product possibilities for untapped/underutilized consumer categories. 

NPCI is in a good position to support RuPay cards across these platforms as it presently provides a variety of solutions across platforms, including ATMs, mobile technologies, checks, etc.

CONTACTLESS RUPAY – TOKENIZATION

With the use of these technologies, Indian customers may safely use their phones to pay with cards while keeping their private card information private.

It will enable the tokenization of cards on smartwatches and other wearables, including various Internet of Things (IoT)-enabled devices, enabling them to process card payments.

BHARAT E-COMMERCE PAYMENT GATEWAY (BEPG)

The new e-commerce system, known as BEPG, will improve the RuPay Cardholders’ present e-commerce experience. With the RuPay card, you may shop online conveniently and quickly without sacrificing security or danger. 

Pay securely by RUPAY

Using “RuPay Pay Secure,” the RuPay Debit Cards can be utilised for online purchases and payments, It’s an E-commerce solution of NPCI.

GOOGLE PAY (ANDROID-BASED PAYMENT PLATFORM)

Users can utilise NFC to interact with payment terminals and link their credit or debit cards to their accounts using Google Pay. An online wallet and payment system is called Google Pay. The user website keeps a list of supported banks by nation and the service works with hundreds of banks and payment processors throughout the world.

INITIATIVES BY GOI

The Government of India’s flagship initiative, Digital India, intends to make India a knowledge-based economy and a society that is empowered by technology by the year 2030. Digital Infrastructure as a Basic Utility, Governance & Services on Demand, and Digital Empowerment of People are its three main goal areas.

• AADHAR

AADHAR is a 12-digit Aadhar number provided by the UIDAI to Indian individuals, which is verified through the de-duplication of demographic and biometric information.

• PMJDY

Aiming to provide inexpensive access to financial services such as fundamental savings and deposit accounts, remittances, credit, insurance, and pensions, PMJDY is a national programme for financial inclusion. There is no minimum balance requirement for PMJDY, and it offers benefits under the Direct Benefit Transfer, Pradhan Mantri Jeevan Jyoti Bima Yojana, Atal Pension Yojana, Pradhan Mantri Suraksha Bima Yojana, and MUDRA programmes. It also offers an overdraft capacity of up to Rs. 10,000.

• JAM (JAN DHAN YOJANA, AADHAAR, AND MOBILE NUMBER)

JAM is a trinity of three ways of identification to secure direct payments of subsidies to the poor. It has boosted the DBT programme, facilitated legitimate databases, and eliminated the need for middlemen or conduits. It also promotes online transactions, using ATMs and payment cards instead of physical visits to banks.

•  ABHIYAAN

DBT will improve the efficiency, effectiveness, transparency, and accountability of the government system, instilling citizens’ trust in the government.

• BHARAT BROADBAND NETWORK (BBNL)

The Government of India has established a Special Purpose Vehicle to develop India’s National Optical Fiber Network (NON).

• CENTRE FOR EXCELLENCE FOR INTERNET OF THINGS (COE-IT)

CoE-IT aims to develop novel applications and domain capability, creating industry-ready people, a start-up community, and an entrepreneurial ecosystem for IoT.

• INDIAN COMPUTER EMERGENCY RESPONSE TEAM (CERT-IN)

CERT-IN or ICERT provides cyber security services such as data gathering, analysis, forecasting, emergency response, and publication of recommendations, warnings, vulnerability notes, and whitepapers through an office inside the Ministry of Electronics and Information Technology, vulnerability notes, and whitepapers.

• DIGILOCKER

Offering quick, easy, comfortable, reasonable, safe, and secure e-payment solutions is the goal of the Payments Vision 2025. It provides citizens with a dedicated cloud storage space linked to their Aadhaar number, and organizations can send electronic versions of documents and certifications to residents’ lockers.

• E Mudra

E Mudhra is a registered Certifying Authority that offers Digital Signature Certificates (DSC), Encryption, and other services to help governments and banks transition to a paperless environment.

• Government e-marketplace

GeM is a cashless, contactless, and paperless online marketplace that has increased transparency and visibility in public procurement, requiring merchants to display the country of origin of products sold. GEM offers a variety of advantages for buyers and sellers, such as a listing of products, search, compare, select and buy, transparency, vendor rating system, user-friendly dashboard, easy return policy, direct access to Government departments, marketing, bids/reverse auction, new product suggestion, dynamic pricing, seller friendly dashboard, and consistent purchase procedures.

• MEGRAJ

GOI has launched “GI Cloud” to leverage the benefits of cloud computing. NIC Cloud Services offers a variety of Cloud services to cater to user requirements, such as Platform as a Service, Infrastructure as a Service, Software as a Service, Load Balancer, Resource Monitoring, Vulnerability Assessment, Backup, Application Performance Management, Antivirus, and Web Application Firewall.

• Payment Vision 2025

Offering quick, easy, comfortable, reasonable, safe, and secure e-payment solutions is the goal of the Payments Vision 2025.

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