Payment Services

CHEQUES
A cheque is a document that orders a bank to pay a specific amount of money from a person's account
to the person in whose name the cheque has been issued. The person writing the cheque known as,
the drawer, has a transaction banking account (often called a current, cheque, chequing or checking
account) where their money is held. The drawer writes the various details including
the monetary amount, date, and a payee on the cheque, and signs it, ordering their bank, known as
the drawee, to pay that person or company the amount of money stated.
It is a type of bill of exchange and were developed as a way to make payments without the need to
carry large amounts of money. Paper money evolved from promissory notes, another form of
negotiable instrument similar to cheques in that they were originally a written order to pay the given
amount to whoever had it in their possession (the "bearer").
It is a negotiable instrument instructing a financial institution to pay a specific amount of a specific
currency from a specified transactional account held in the drawer's name with that institution. Both
the drawer and payee may be natural persons or legal entities. Cheques are order instruments, and are
not in general payable simply to the bearer as bearer instruments are, but must be paid to the payee.

MICR CHEQUE
MICR code is a character-recognition technology used mainly by the banking industry to ease the
processing and clearance of cheques and other documents. The MICR encoding, called the MICR line, is
at the bottom of cheques and other vouchers and typically includes the document-type indicator, bank
code, bank account number, cheque number, cheque amount, and a control indicator. The technology
allows MICR readers to scan and read the information directly into a data-collection device.
Unlike barcodes and similar technologies, MICR characters can be read easily by humans. The manual
clearing of cheques where there is a possibility of many human errors and subsequent delay in
clearing, the MICR code on the cheque printed with a unique magnetic ink usually iron oxide has
magnetic material present in it and thus makes it machine-readable and almost error proof!
Under this method the reading machine or a cheque sorting machine reads through a cheque when
inserted and identifies the branch the cheque belongs to and activates the automation clearing
process.
The MICR code is so clear and fine that the machine could read it even if the MICR code isn't visible
due to other marks or stamps on it. The RBI intends to reduce paper-based clearing process by
introducing MICR- Cheque Processing Centres that will process over 95 per cent of volume and value
of cheques processed in the country.

MULTI-CITY CHEQUE
 Payment Services

A Multi-City Cheque (MCC) is one that can be written by the customer in favour of his client and is
payable at par at all branches of the Bank. These are issued as Order Cheque. MCC can be issued in
cheque operated accounts (SB and Current). The MCC facility is to be used only for genuine
transactions / bonafide remittances. No cash payments will be made to third parties at other
branches.
In SBI, the upper limit for issue of MCCs is Rs.5 lakhs. The issue charges for MCC are Rs. 3 per cheque
leaf and will be debited from the account at the time of issue of the cheque book. 50 Cheque leaves are
provided without any charge to each account. There are no transaction charges.

DEMAND DRAFT
A demand draft is a method used by an individual for making a transfer payment from one bank
account to another. When a bank prepares a demand draft, the amount of the draft is taken from the
account of the customer requesting the draft and is transferred to an account at another bank. The
drawer is the person requesting the demand draft; the bank paying the money is the drawee; and the
party receiving the money is the payee. For example, a small business owner purchases products from
another company on credit. The small business owner asks his bank to send a demand draft to the
company for payment of the products, making him the drawer. The bank issues the draft, making it
the drawee. After the draft matures, the owner of the other company brings the demand draft to his
bank and collects his payment, making him the payee.

PAY ORDER/BANKERS CHEQUE

Pay order is also called as banker’s cheque. Pay order is not a Negotiable Instrument. A negociable
instrument is a document that guarantees the payment of a specific amount of money from one
person to another. It is a transferable, signed document that promises the payment of the amout on
demand or at a specific time. 
A pay order is payable on the issuing bank, that is they are applicable for payment within the city and
if it is once made, a person cannot cancel the pay order if the party is in any other city. It is basically
issued for local use and is payable only in that particular town.
The definition of pay order is a “document which instructs a bank to pay a certain sum to a third party.
Such orders are normally acknowledged by the bank which provides a guarantee that the payment
will be made.”
The Key differences between a Pay order and a Demand Draft are:

  Pay Order Demand Draft

Definition Document which instructs A signed, written order by

 Payment Services

a bank to pay a certain sum

which one party (the
to a third party. Such
drawer) instructs another
orders are normally
party (the drawee) to pay a
acknowledged by the bank
specified sum to a third
which provides a guarantee
party (the payee), at sight
that the payment will be
or at a specific date.
made.

Negotiable Not Negotiable Instrument Negotiable Instrument

Is payable on the issuing Is payable to same bank

Payable
branch with other branch

Payment Is not mode of payment Is mode of payment

In one place to another

Payment made Locally
place

ATM
An ATM card is a payment card or dedicated payment card style card issued by a financial
institution which enables a customer to access automated teller machines (ATMs). ATM cards are
payment card size and style plastic cards with a magnetic stripe or a plastic smart card with
a chip that contains a unique card number and some security information such as an expiration date
or CVVC (CVV). ATM cards are known by a variety of names such as bank card, MAC (money access
card), client card, key card or cash card, among others. Most payment cards, such as debit and credit
cards can also function as ATM cards, although ATM-only cards are also available. Charge and
proprietary cards cannot be used as ATM cards. The use of a credit card to withdraw cash at an ATM is
treated differently to a POS transaction, usually attracting interest charges from the date of the cash
withdrawal. Interbank networks allow the use of ATM cards at ATMs of private operators and
financial institutions other than those of the institution that issued the cards.
ATM cards can also be used on improvised ATMs such as "mini ATMs", merchants' card terminals that
deliver ATM features without any cash drawer.[1][2] These terminals can also be used as
cashless scrip ATMs by cashing the receipts they issue at the merchant's point of sale.

DEBIT CARD
 Payment Services

A debit card (also known as a bank card, plastic card or check card) is a plastic payment card that

can be used instead of cash when making purchases. It is similar to a credit card, but unlike a credit
card, the money comes directly from the user's bank account when performing a transaction.
Unlike credit and charge cards, payments using a debit card are immediately transferred from the
cardholder's designated bank account, instead of them paying the money back at a later date.
Debit cards usually also allow for instant withdrawal of cash, acting as an ATM card for withdrawing
cash. Merchants may also offer cashback facilities to customers, where a customer can withdraw cash
along with their purchase.
CREDIT CARD
A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a
merchant for goods and services based on the cardholder's promise to the card issuer to pay them for
the amounts so paid plus the other agreed charges. The card issuer (usually a bank) creates
a revolving account and grants a line of credit to the cardholder, from which the cardholder can
borrow money for payment to a merchant or as a cash advance. In other words, credit cards combine
payment services with extensions of credit. Complex fee structures in the credit card industry may
limit customers' ability to comparison shop, help ensure that the industry is not price-competitive and
help maximize industry profits. Because of this, legislatures have regulated credit card fees.
A credit card is different from a charge card, where it requires the balance to be repaid in full each
month. In contrast, credit cards allow the consumers a continuing balance of debt, subject
to interest being charged. A credit card also differs from a cash card, which can be used like currency
by the owner of the card. A credit card differs from a charge card also in that a credit card typically
involves a third-party entity that pays the seller and is reimbursed by the buyer, whereas a charge
card simply defers payment by the buyer until a later date.

ATM VS DEBIT CARD VS CREDIT CARD

ATM cards are the simplest type of card. Again, they can generally only be used at an ATM for basic
banking transactions.
Debit cards, also known as check cards, allow you to spend from your checking account anywhere
cards are accepted. They also do everything that ATM cards do. Whether you use the card to withdraw
cash or make a purchase, the funds come directly from your checking account (usually within a few
days).
Credit cards allow you to borrow from your credit card issuer.
Funds do not come directly out of your checking account. Instead, you build up a loan balance that you
pay off at a later date. It’s best to pay off the entire balance every month so that you don’t pay interest
charges, but you can pay less if you need to—just be aware of the consequences. Credit cards are safer
than debit cards for everyday spending
 Payment Services

SMART CARD
Smart banking cards can be used as credit, direct debit or stored value cards, offering a counterfeit-
and tamper-proof device. The intelligent microchip on the card and the card readers use mutual
authentication procedures that protect users, merchants and banks from fraudulent use. Other
services enabled by smart cards are advanced loyalty programs and electronic coupons. It is Plastic
card with embedded microprocessor chip, electronic memory, and a battery. Used for information
storage and management and authentication, it looks like, works like, and is of the same size as a bank
or credit card but may not have a magnetic stripe on its back.

TRAVEL CARD
Travel money cards are a popular, convenient and secure way to buy foreign currency and take it
overseas. Essentially, travel money cards are specially designed debit cards that you load up with
foreign currencies prior to travelling.
The advantage of pre-loading the card with your choice of currency is that you can do so when the
exchange rate is at its most favourable – you can convert your money into foreign currency when it’s
worth the most. Spending in the local currency also means you won’t pay currency conversion fees
every time.
For the traveller going to one country or several, a travel money card has many pros and cons over
other types of travel money. A travel money card can be easier (and more secure) than carrying cash
or traveller’s cheques, because you can preload a card with a single currency or several, according to
your travel plans. Different cards offer different currencies but most products offer US dollars, UK
pounds, Euros, and New Zealand dollars, among others.
Once abroad, you can reload your card or change the currencies around via the internet or your
mobile phone. You can use your card to withdraw cash from ATMs, shop for souvenirs, pay for
restaurant meals or book accommodation online