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Showing posts with label ECS. Show all posts
Showing posts with label ECS. Show all posts

Saturday, 26 March 2016

19:02

Unified Payments Interface will be as transformational as Aadhaar

Unified Payments Interface will be as transformational as Aadhaar

Unified Payments Interface (UPI), a new process in electronic funds transfer, will be inaugurated by Reserve Bank of India Governor Raghuram Rajan on April 11. Conceived and being implemented by National Payments Corporation of India (NPCI) under the guidance of former chairman of Unique Identification Authority of India (UIDAI) Nandan Nilekani, this mode of payment is likely to be as transformational as Aadhaar when it gets adopted by most banks.

Initially, 29 banks are likely to adopt it, and certification is already in progress for 12 banks. Other banks will join soon. The process will ride on the existing infrastructure of Immediate Payments Service (IMPS), which facilitates money transfer from any bank/wallet account to any other bank/wallet account as permitted by RBI “instantly” 24×7. UPI enhances the user experience of IMPS with some additional processes.

Firstly, UPI enables ‘instant collect’, which was not possible under IMPS. It addresses the current problem of about 30% decline in e-commerce payment transactions due to a complicated transaction flow. With UPI, the friction gets minimised and e-commerce market players can pull money from shoppers easily. Cash on delivery (COD) transactions can also be completed by the delivery staff by collecting money electronically while delivering the goods.

A biller can collect bills from consumers by automating the collection process on the due date, supplementing thereby the already existing ECS (debit)/NACH (debit) process. Clubs/schools can collect periodic fees. A daughter can now make a UPI request to her father’s account and the father, recognising that the request has come from a valid source, can authorise the transaction or even reject it.

The father can also “hold” the transaction for verifying the transaction before authorising it with a one-time password (OTP) or static PIN. The landlord can pull the money from the tenant. There can be multiple usage of such nature for online/face-to-face payments. Secondly, UPI has a facility to identify a bank customer with an email-like virtual address.
A customer can create a unique financial address in his/her bank linked with the bank account number at the backend. The customer will use only the virtual address while dealing with others without sharing the account details. For instance, a customer at State Bank of India (SBI) can create an address like shortname@ sbiormobilenumber@sbi.

Looking at the domain name sbi, NPCI will route the transaction to SBI and SBI will apply the credit/debit by resolving the virtual address to the account number. A customer can have multiple virtual addresses for multiple accounts in multiple banks. There is no account number mapper anywhere other than the customer’s own bank to ensure privacy of customer data.
The advantage of such an approach is the customer can freely share the financial address to others. Thirdly, UPI will operate primarily on smartphones, leveraging their ever-increasing utilities. Though the current base of smartphones in India is about 300 million (December 2015), the number is likely to touch 400 million in two years. This will help customers to do a whole range of banking operations and shopping from the mobile itself.

Smartphones will also enable banks and their certified merchants to integrate the library being supplied by NPCI so that the process of capturing the authentication information is secure and uniform across banks similar to customers providing authentication information on ATMs irrespective of bank ownership. As mobile phones get Aadhaar-ready, biometric authentication would also be possible through them.

Fourthly, UPI will enable single-click two-factor authentication with mobile itself as the first-factor using the unique hardware identification of the smartphone, and OTP/static mobile PIN as the second. Banks will compete with each other to provide simple and user-friendly solutions without compromising on the regulatory guidelines on two-factor authentication. A few banks are enhancing the security without compromising simplicity.

For instance, the application can have a facility for the user to maintain a list of virtual addresses from which pull request would be permitted or to pre-register the beneficiaries. Banks can have applications with utilities to remind when bill payments are due. Customers can also generate various reports on transactions made.
In summary, UPI promises to be truly transformational. Let us watch how it shapes the future of payment systems in the country.

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Saturday, 19 March 2016

21:14

ECS will be replaced with NACH from 01/04/2016.

ECS will be replaced with NACH from 01/04/2016.

Kindly ensure that all ECS payment to be made through till 31/03/2016.

NACH stands for National Automated Clearing House.

National Payments Corporation of India (NPCI) has implemented “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.

National Automated Clearing House (NACH) is a centralised system, launched with an aim to consolidate multiple ECS systems running across the country and provides a framework for the harmonization of standard & practices and removes local barriers/inhibitors. NACH system will provide a national footprint and is expected to cover the entire core banking enabled bank branches spread across the geography of the country irrespective of the location of the bank branch.

With the implementation of NACH system, NPCI intends to provide a single set of rules (operating and business), open standards and best industry practices for electronic transactions which are common across all the Participants, Service Providers and Users etc. NACH system also supports Financial Inclusion measures initiated by Government, Government Agencies and Banks by providing support to Aadhaar based transactions.

The NACH system facilitates the member banks to design their own products and also addresses specific needs of the banks & corporates including a refined Mandate Management System (MMS) and an online Dispute Management System (DMS) coupled with strong information exchange and customised MIS capabilities.

The NACH system provides a robust, secure and scalable platform to the participants with both transaction and file based transaction processing capabilities. It has best in class security features, cost efficiency & payment performance (STP) coupled with multi-level data validation facility accessible to all participants across the country.

NACH’s Aadhaar Payment Bridge (APB) System, developed by NPCI has been helping the Government and Government Agencies in making the Direct Benefit Transfer scheme a success. APB System has been successfully channelizing the Government subsidies and benefits to the intended beneficiaries using the Aadhaar numbers. The APB System links the Government Departments and their sponsor banks on one side and beneficiary banks and beneficiary on the other hand.

Source:BankingUpdates
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Sunday, 30 August 2015

11:16

No payment systems to work on 2nd, 4th Saturdays from Sept 1: RBI

No payment systems to work on 2nd, 4th Saturdays from Sept 1: RBI

With effect from Thursday, payment systems would not work on the second and fourth Saturdays of a month, but would operate the full day on working Saturdays, the Reserve Bank of India (RBI) said.

The payment systems that would not work include Real Time Gross Settlement (RTGS), National Electronic Fund Transfer and Electronic Clearing Service (ECS).
































This is because all scheduled and non-scheduled banks, public, private, foreign, cooperative, regional rural and local area banks, will have a holiday on the second and fourth Saturdays from September.

The other payment systems that would not work on these days include cheque clearing including the grid-based Cheque Truncation System, Regional Electronic Clearing Service and National Electronic Clearing Service.

RBI said the processing of future value dated transactions with a value date falling on the second and fourth Saturdays will not be undertaken under RTGS and ECS.

Following a pact between public sector bank employees and officers with the management, it was decided that all branches in the country would remain closed on all the second and fourth Saturdays from July. Subsequently, the government issued a notification enabling the same for all banks. RBI has clarified it will continue to operate fixed rate reverse repos as well as the marginal standing facility windows on all working Saturdays. It will also operate a fixed rate liquidity adjustment facility repo window on all working Saturdays.

The central bank also said that as a regulator of banks, financial markets and payment and settlement systems, it had made supporting changes in the working of some of its operational areas. The arrangements would be reviewed after six months.
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