payments imps
TRANSCRIPT
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Agenda
Payment SystemsExisting Payment Systems – ECS, NEFT & RTGSMobile Payments – IMPS
Modes of Transfer & Various Use cases Process Flow Advantages & Disadvantages Comparison with other payments
Future PaymentsEmerging Trends
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Payment Systems
Definition: Financial system supporting transfer of funds from payers to payee/s.
Role:
Payment systems to provide safe, efficient, affordable, easily accessible and robust payment services
Payment systems help in the smooth flow of money in the economy thus increasing the liquidity in the hands of the customer enhancing his purchasing capacity
Payment systems would also help minimize cases of fraud, use of counterfeit notes and black
money
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Payment Systems across time
Yesterday Today
Barter System Early civilization
Cowries , coins, precious metals Middle ages
Hundi 12th Century
late 18th CenturyCurrency
19th CenturyPromissory notes, bills of exchange, cheques
Travellers’ Cheques 20th Century
1980s ATMs, MICR based cheque processing centres, Cards (credit and debit)
1990s Internet Banking, ECS, EFT
2004
2005
2007
2008
RTGS
NEFT
Mobile Banking
CTS
2010 IMPS
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Classification
Indian Payments
Retail
Paper Based
Cheque -MICR Demand Draft
Electronic Based
ECS NEFTCheque
Truncation system
Mobile Based
IMPS
Large Value Systems
Paper Based Electronic Based
RTGS
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Global PaymentsUse of payment instruments by non-banks: total number of transactions, 2010 (Millions, total for the year)
Source: Data is from the Bank for International Settlements’ Statistics
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Payments in India
Paper – Cash and ChequeElectronic – ECS, Cards, NEFT, RTGS and Mobile Source : RBI website
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Electronic Clearing Service (ECS)
It was introduced by RBI Provided an alternative method of effecting bulk transaction Avoided need for issuing and handling paper instrument User has to submit the mandate to the bank. (E.g.: MICR -Cancelled Cheque) No Transaction limit
There are two types of ECS:
ECS – Debit - There is multiple debit from vast section of people and corresponding single credit entry. E.g.: Bill payment
ECS - Credit - Electronic fund transfer from one account to many transactions transfers. E.g.: Salary Payment
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Real Time Gross Settlement (RTGS)
Introduced by RBI in 2004 RTGS systems are managed by RBI.Transfer anywhere within India. Funds for > Rs 2 lakh to be transferred through RTGS. Lower funds cannot be
transferred . Upper Transaction limit set by individual bank. Payment instruction handled individually. Payment is final and irrevocable and the receiver can utilize the funds immediately RTGS Timings:
Weekdays : 9:15 AM to 4:15 PM Saturday : 9:15 AM to 1:15 PM ; No settlement on Sundays and Holidays
Service Charge applicable to customer Steps for Transaction : Register Payee & Transfer Funds
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National Electronic Funds Transfer System (NEFT)
It was launched by RBI in 2005 It permits to transfer funds of lower value. Neither lower limit nor upper limit Transfer anywhere within India Operate on a deferred net settlement (DNS) basis which settles transactions in
batches. NEFT Timings:
Weekdays: 12 times every hour from 8:00 AM to 7:00 PM Saturday : 6 times every hour from 8:00 AM to 1:00 PM No transfer on Sundays and Holidays
Service Charge is applicable to the Customer Steps for Transaction : Register Payee & Transfer Funds
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National Payment Corp. of India (NPCI)
Initiated by Reserve Bank of India (RBI)
Private limited company incorporated in December 2008
Ten core promoter banks ( 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)
Board Chairman - Shri N. R. Narayana Murthy
RBI representatives are Board Members
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InterBank Mobile Payment Service (IMPS)
Initiated by NPCI along with 4 Member banks – SBI, Bank of India, Union Bank of India and ICICI Bank
Launched on 22nd November 2010
Service available to Public
To participate in IMPS, Banks should have approval from RBI
Available with 54 Banks
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Objective of IMPS
Make a Mobile as Channel
Available – 24 X 7 X 365
No more sharing of bank account details
Instant
Payment – Simple, convenient
Time & cost saving
Safe & Secure
Immediate Confirmation
Use existing payments infrastructure (existing ATM networks)
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Advantages of Mobile Channel
Mobile phone is a universal device 900+ million connections and growing most Indian families have access to one
It is a two way communication device Unlike cards Multiple level of security possible
Multi-mode communications SMS, Internet, USSD and Voice Even the semi-literate and illiterate people find it easy to use
Enables transactions in-person and remotely
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Modes of Transfer
Funds Transfer using Mobile Using Mobile Application Using SMS Using National Unified USSD Platform (NUUP)
Funds Transfer using Internet To Account registered to IMPS To Account not registered to IMPS (Using Indian Financial System Code[IFSC])
Funds Transfer through ATM
Merchant Payments through Internet – Using OTP
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Steps for Transaction
Registration of Remitter – Generate MMIDMMID (Mobile Money Identifier) is 7-digit number, to be issued by
the Bank. Unique number for every associated account
Registration of Beneficiary – Generate MMIDFunds Transfer
Login to Mobile Banking Application or Send SMSEnter Beneficiary MMID, Beneficiary Mobile Number & AmountFunds Transferred ImmediatelyRemitter & Beneficiary receives confirmation
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Demonstrate IMPS
Account Holder A wants to transfer funds
Citi Bank Account ICICI Bank AccountIMPS
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Transaction using National Unified USSD Platform (NUUP)
Unstructured Supplementary Services Data (USSD)
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Transaction Limit & Service charge Transaction Limit
RBI Mandate - With end to end encryption: Banks are free to set their own limit.For ICICI Bank - Limit of 5 lakhsFor CITI Bank – Limit of 49,000
RBI Mandate - Without end to end encryption: Transaction up to Rs 5,000.For CITI Bank & ICICI Bank – Txn Limit of 1000
Service Charges RBI Mandate - The charges for remittance through IMPS are decided by the individual banks
No Charges in Citibank
Charges in ICICI IMPS
Amounts upto Rs 10,000 Rs 2.50 + Service Tax
Amounts above Rs 10,000 and upto Rs 1 lakh Rs 5 + Service Tax
Amounts above Rs 1 lakh and upto Rs 2 lakh Rs 15 + Service Tax
Amounts above Rs 2 lakh and upto Rs 5 lakh Rs 25 + Service Tax
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Use Cases
•Currently - Cash
•IMPS thru Mobile
Pay Auto-fare
•Currently - Cash
•IMPS thru Mobile
Give money to family member
•Currently – Debit Cards, Credit Card, Net Banking
•IMPS thru Internet
Buy railway tickets online
•Currently – Debit Cards, Credit Card, Net Banking
•IMPS thru Internet
Online Shopping
•Currently – Debit Cards, Credit Cards, Cash
•IMPS thru Mobile
Buy goods from stores
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Use-cases
•Currently - NEFT, RTGS, Cheque, Demand-Drafts
•IMPS thru Mobile or Internet
Transfer Funds
•Currently - Cash
•IMPS thru Mobile
Buy vegetables
•Currently – Debit Cards, Credit Card, Net Banking
•IMPS thru Internet
Pay Mobile Bills online
•Currently – Debit Cards, Credit Cards, Cash, Cheque
•IMPS thru Mobile
Pay Mobile Bills at store
•Currently – Cash
•IMPS thru Mobile
Pizza Delivery
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Pros and ConsAdvantages Disadvantages
Instantaneous
Available all the time
Without using any
additional device such
as Cards, POS
Multiple Channels
available such as Mobile
Application, SMS, USSD
etc
Dependent on Mobile
device
Mobile service is not
quick and not reliable
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Comparison with other payments
IMPS NEFT RTGS
Time to Process Instantaneous Operates every one hour Instantaneous
Availability 24 X 7 X 365 Available in working hours Available in working hours
Restriction on Amount
Maximum 5 Lakh Maximum 5 Lakh > 2 LakhMaximum 5 Lakh
Service Charge Tiered Charges Tiered Charges Tiered Charges
Geographic spread Supported by 54 Banks 78,000 enabled bank branches
78,000 enabled bank branches
Channels Mobile – SMS, Mobile Application, USSDInternet
Internet, Branch Internet, Branch
Reliability Low due to Mobile Service High High
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Future PaymentsMobile Wallets
Mobile Voice Banking Mobile Voice Banking System which authenticates voice input with the help of caller id and
biometric voice authorisation and validates registered users
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Trends for Future Payments
• Do the payment products are convenient to use?
•Is the pricing of products affordable and transparent? Are we providing low-cost, technology based payment products ?
Cost
•Do the payment products are convenient to use?
Convenience
•Do the systems and processes create confidence in people to use electronic payment system?
Confidence
•Are all stake-holders working towards standard product and processes?
Convergence
•Are we protecting Consumer’s Information? Have we created accessible and timely resolution of consumer grievances redressal mechanism?
Consumer Protection
•Are we creating awareness in consumers for creating a viable payment system for FI?
Communication
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Innovate to Win
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