Payment System

Infrastructure in
India
 ROADMA
• Introduction. P
• Payment Landscape: India & Global
• Evolution of Payment and Settlement Systems in India!!
• NPCI: offering different platforms for payments
• RuPay: say goodbye to MasterCard and Visa
• IMPS: instant funds transfer
• Innovative Payment Models around the world
• Latest developments in the payment scenario globally including
India
• NEFT and RTGS transactions over three financial years
• Proposed TRIPARTITE MODEL
 INTRODUCTIO
N
Payment v/s Settlement

Payments:
- something that is paid to someone in
return for goods or services

- traditionally cheques, drafts etc. paid in lieu of

cash

- various payment methods have evolved with

time
Settlement:
- process of fulfilling certain contractual obligations by
means of payment
- settlement is successful in banking when one’s account
gets debited and another’s account gets credited
-
P1 P2

Q1 Q2
Payment and Settlement systems
•the Central Bank (RBI) formulates and regulates its
structure

•BPSS (Board for Regulation and Supervision of

Settlement systems ) has been set up for
authorizing, prescribing policies and setting
standards

• DPSS (Department of Payment and settlement

systems) executes the directions of BPSS

•only RBI is authorized to allow different payment

system operators to operate in India
 PAYMENT LANDSCAPE IN
INDIA
• Electronic payments steadily gaining popularity in the cash
dominant Indian society.

• As of F.Y 2014, percentage share of cheques in retail

payments reduced to 35% from 66% in F.Y 2010; and share
of electronic payments have increased from 34% in F.Y 2010
to 65% in F.Y 2014. As of 2020, the share of paper clearing in
total retail payments plunged to just 2.96 per cent in terms of
volume and to 20.08 per cent in terms of value,

• NPCI set up in 2009: to act as the umbrella institution for all

sorts of retail payments.

• NPCI currently handles around 18mn transactions daily.

• Total Number of ATMs at present= 2lac approx. which is
around 15 ATMs per 1 lac people. Very minimal than that of
BRIICS countries where per 1 lac people, the figures are 130,
120,50 and 62.

• Installed 1.1 million POS terminals constitute less than 10% of

the 14mn merchants in India.

• e-commerce sector set to touch 150 bn by 2022.

EVOLUTION OF PAYMENT & SETTLEMENT SYSTEMS IN
INDIA
1980 MICR was introduced to mechanise the cheque clearing

system

1990 EC S and EFT were introduced, thus permitting issuance of Credit and Debit
s cards

199 Institute for Development & Research in Banking Technology (IDRBT) was set-up for technical upgradation
6 and developing a reliable network

200 Clearing Corporation of India Limited (CCIL) was set-up by banks, financial institutions and primary
1 dealers

200 National Financial Switch (NFS) was introduced for interconnectivity of ATMs across the
3 country

200 Core Banking Systems (CBS) was introduced by banks, and alongside RTGS and NEFT were introduced by
4 RBI

200 Payment and Settlement Systems Act (PSS Act, 2007) came into
7 existence
2008 Cheque Truncation System (CTS) was introduced, and alongside the National Payments Corporation
of India (NPCI) was also set-up

2009 Introduction of 2nd factor authentication : “Card Not Present”, the first of its kind in the
world(OTP)

2010 Immediate Payment Service (IMPS) was introduced by

NPCI

2012 NPCI launched RuPay, the domestic card payment

network

2014 RuPay Card was dedicated to India by President Pranab Mukherjee on 8th of May,
2014

2008- Improvising of payment infrastructure through creation of AEPS(Aadhar enables

15 payment system ), APBS(Aadhar payment Brid system), NACH(national
automated clearing House), NUUP(National Unified Unstructured
Supplementary Data Platform)
 PAYMENT LANDSCAPE: GLOBAL
• Undergoing constant transformation ever since first ATM launched in US
in 1969.

• Growth of domestic card schemes like CUP of China, ELO of Brazil, and
our very own RuPay pose tough competition to global card schemes and
network.

• Around 7.7 bn bank cards will be issued by domestic card issuers by end
of year 2017.

• Stored-value cards and e-wallets such as m-Pesa and Paytm are some
success stories.

• Google-wallet, Apple Pay signifies entry of social sites and tech cos. Into
the payments sector.
 NPCI: OFFERING DIFFERENT PLATFORMS FOR PAYMENTS

• A Section 8 Company under Companies Act,2013.

• Started with 10 core promoter banks, but soon going to add 50 new
banks as its shareholders.
• CTS : reduced the time for clearing of cheques through Clearing
Houses; gets cleared in T+1 days; 3 Grids: 66 MICR centers.
• N A C H : centralised clearing house for all EC S transactions; N A C H Debit
& N A C H Credit; N A C H Debit: efficient mandate-based debit services by
use of UMRN; N A CH Credit: creates only a single debit in user
institution’s bank account and provides credit (pension, salary etc.) to
beneficiaries.
• NFS: ATMs across the country get connected via this switch; it has 470 Banks and con
approx 2.03 lac ATMs.

• APBS: applicable in DBT schemes based on Aadhaar Card

Numbers; bulk payment system (Aadhar Payment Bridge System)

• USSD: does not require any app to be downloaded or have GPRS

connectivity to enjoy USSD solution

• eKYC: electronic Aadhaar based KYC; workable on mobile, PC,

internet based channels.

• White Label ATMs: around 7000 WLA s of 7 WLAOs are at

present.
Products
Rupay
IMPS
NACH
ABPS
AePS
NFS
UPI
BBPS
NETC(Tolls)
 RUPAY: SAY GOODBYE TO MASTERCARD AND VISA

•Only the 6th nation in the world to have a domestic payment

gateway
•More than 170 mn RuPay cards have been issued till date
•Issued by more than 1100 banks
•Usable in 12 lac+ PoS terminals & 30,000+ e-com merchants
•Partnered with JCB International for global usage
•Nearly 1 3 % of all transactions are done via RuPay Debit cards
•RuPay Credit Cards launched in 2016
 IMPS: INSTANT FUNDS TRANSFER

• It is a 24*7 inter-bank electronic fund transfer service

• Obtain M M I D and MPIN from the bank: then download
the required Application for using the service to remit
money
• The beneficiary should also obtain the M M I D from the
bank
• Minimum value: Re.1/- ; Maximum value Rs. 5 lac/-
• PNB tied up with Xoom Corp. for instant transfer of funds
from US to India using IMPS facility
 INNOVATIVE PAYMENT MODELS AROUND THE
WORLD
• m-Pesa of
Kenya

• China Union Pay

(CUP)
 LATEST DEVELOPMENTS IN THE PAYMENT SCENARIO
GLOBALLY INCLUDING INDIA
• Venmo

• PayPal

• PingPay of Axis
Bank

• KayPay

• icicibankPay
One of the main objective of project was to
check the performance of transactions
under NEFT by 15 selected major banks
for three financial years
NEFT PERFORMANCE OVER LAST THREE FINANCIAL YEARS: JULY 2012 TO J
•NEFT projections: Outward Debit comparisons of transaction amount
in Rs. Crore.
• NEFT projections: Inward Credit comparisons of
transaction amount in Rs. Crore.
RTGS PERFORMANCE OVER LAST THREE FINANCIAL YEARS: JULY 2012 TO J
• RTGS projections: Comparisons of Outward transaction amount in
Rs. Crore.
• Mobile Banking projections: Compariosns for
transaction amount (in Rs.’000)
 TRIPARTITE MODEL
• Solace to patients, Relief to hospitals & triggering RuPay’s revenue
generation.