Unit 4: Technology in Banking

A.CPlastic card
A bank card is typically a plastic card issued by a bank to its clients, that
performs one or more services that relate to giving the client access to a
bank account.
 Parts of a debit/credit card:
The following subheadings contain information on details on the front side
of the card.
Bank branding: This section identifies your card issuer.
Card number: It is a number that identifies your account with the card
issuer, and those are the digits you need to provide when making
purchases online or by phone. It is typically 16 digits, though some
manufacturers use as little as 1 4 or as many as 19
Cardholder's name: This is the person authorized to use the card
Smart chips: These tiny metal processors make cards more secure than
traditional magnetic-stripe-only cards. Chips make it harder for thieves to
use stolen credit card numbers.
Expiration date: You need to replace your card periodically. The move to
smarter cards is just one reason banks issue new cards. Banks typically
mail out new cards shortly before old cards expire
Payment network logo: It’s essential to know what type of card you have.
Common examples include MasterCard, Visa, and Discover. When paying
online, there is usually a drop-down menu that requires you to select which
network your card belongs to. These Logos are also helpful when you plan
to use your card to pay for goods or services-merchants often display
stickers or placards telling you which cards they accept
The backside of the card:
The following subheadings contain information on of details on the
backside of the card.
Magnetic stripe: This black strip contains Information about you and your
card, and specialized devices known as card readers gather that
Information. Every time you swipe your card at a Merchant, you run the
magnetic stripe through a card reader to provide your payment details
Hologram: Some cards display a hologram, or a mirror-like area showing a
three-dimensional image that seems to move as you change your viewing
angle. Holograms are a security feature that helps merchants identify valid
cards (holograms are hard To fake). Sometimes holograms appear on the
front of your card.
Bank contact information: if you need to get in touch with your bank, use
the contact information on the back of your card. This is not only
convenient-it`s also an excellent way to prevent fraud. When you use the
contact information on your card, you know that you're really talking with
somebody from your bank.

Signature panel: Your card must be signed before you can use it, so sign
your name in this area.
Security codes: Cards are printed with an additional code to help ensure
that anybody using the card number has a legitimate, original card.

Network logos: Your card might have additional network logos on the
back, often in the lower-right corner. These logos help you figure out which
ATMs you can use for free.

BENEFITS OF PLASTIC MONEY

Plastic money comes with many benefits, including:

1. Cashless living:
Plastic money has not only made our lives easier but has also alleviated the
hassles that come with carrying currency. Some of the best credit cards
allow us to move around the world without worrying about carrying cash.

2. Better security:
One advantage of using credit or debit cards is the decrease in robberies
and crimes. Hacking a card's PIN is difficult and necessitates the knowledge
of certain procedures. As a result, credit and debit cardholders can be
reasonably confident of the security of their funds.
3. Financial freedom:
Credit cards allow a person to make a transaction and pay for it even when
they do not have the funds. It is incredibly beneficial especially when you
are short on cash. Credit cards also reduce the need to rely on others for
financial assistance in an emergency. You can use the credit card to fund
your requirement and later pay back in installments. Further, a credit card
is easy to get. All you need to do is meet your bank’s credit card eligibility
criteria, and the card is yours.

4. Ease of doing transactions:

Credit cards and debit cards can help make online payments, fund
transfers, and other transactions with ease. It is incredibly simple to make
payments with plastic money from any location. Furthermore, several
online businesses provide discounts when paying using credit and debit
cards.

5. Exciting deals and discounts:

Every credit and debit card provider offers deals and discounts on
shopping. They can help you save more and earn cashback on purchases.

6. Saving on travel
Traveling can be expensive without plastic money. Credit and debit cards
provide lounge access and incredible deals on travel bookings. You cannot
enjoy the same benefits while using cash, making plastic money a must if
you are traveling.

Drawbacks of plastic money

Plastic money also has some downsides, such as:

1. Does not work everywhere

There may be certain venues and stores where only cash is accepted. For
example, buying products from a small merchant or buying vegetables or
newspapers.

2. Can land you in debt

If a person is not careful with plastic money, they can often overstep their
spending limit and spend more than they can repay. This can land them in
3. Plastic money alone will not always be helpful:

Plastic money is not a total cash substitute. Cash itself is necessary for
certain areas. We need cash since neither the newspaper guy nor the fish
vendor has a POS system to process plastic money whenever we purchase
fish from the market. In a similar vein, while we make monetary
contributions to houses of worship, they do not accept plastic money there
too.

4. Plastic money is also not 100% safe:

There is some danger associated with transactions using plastic money, so

it is not completely secure either. particularly while purchasing online. We
are communicating card information through the internet, which is not
necessarily a secure medium.

5. Service fee:

In certain circumstances, the bank levies a service fee when we use plastic
money to make purchases rather than actual cash. For instance, in certain
nations, you must pay a service fee when using a credit card to buy gold
from a jewelry store. This extra fee will not be charged if you pay with cash.

B. WIRED/WIRELESS Point of Sale

 Meaning (Wired POS)
A POS or Point of Sale machine is a terminal or part of the checkout
process that processes credit or debit cards and finalizes the
transaction. Sometimes it can be a whole terminal with a cash
register, printing unit, display monitor, etc. or sometimes it can be as
small as a mobile.
 Meaning (Wireless POS)
A wireless pos machine works the same as a wired terminal, but with the
added freedom to accept payments in non-traditional locations. The
benefits of a system like this are limitless. A wireless terminal allows you to
go to the customer and finalize their transaction right where they are.
WPOS is a smartphone, tablet, or dedicated wireless device that performs
the functions of a cash register or electronic point-of-sale terminal (POS
terminal) wirelessly. 

ELECTRONIC KNOW YOUR CUSTOMER

MEANING
Electronic know your customer or e-KYC is the way of resident
authentication used by an organization like banks. Aadhaar allows the
residents to submit it as a document verifying their identity and other
particulars linked to them using documentation such as their Aadhaar Card.
How to Do KYC Online through Aadhaar-based Biometric?
You have to follow the steps mentioned below for online KYC using Aadhaar
Biometric Authentication:
 Visit the portal of any KRA or fund house
 Perform online KYC as mentioned in the process above
 Request for biometric authentication online
 An executive from the fund house visits the address mentioned in the
form
 Show him your original documents and provide your biometrics
 Your application will be submitted and KYC will be done
Types of Aadhar EKYC
1. Paper-based KYC
This type of KYC verification happens in person using self-attested, physical
copies of the address and identity proofs. You need to physically visit the
bank, fund house office, or KYC Registration Agency and submit the signed
form along with the documents.
2. Aadhaar-based eKYC
In this method, the data collected by the Unique Identification Authority of
India (UIDAI) is used to authenticate customers remotely. You can opt for
online identity verification using Aadhaar OTP based or Biometric-based
verification. For OTP-based verification, you would need to have your
mobile number linked with your Aadhaar Card. For biometric verification,
on the other hand, you need to provide your biometrics, which would then
be evaluated using UIDAI-certified biometric scanners.
 Online Aadhaar e-KYC Using OTP
You can initiate your e-KYC process online using the one-time password
(OTP) sent to the mobile number linked to your Aadhaar card.
You would need to click on the ‘Generate OTP’ option for the same. Enter
the OTP to authenticate your identity and complete the e-KYC process.
 Online e-KYC Aadhaar Biometric Authentication
You also have the option to complete your Aadhaar KYC verification
electronically using your biometrics. For this, you would need to place a
request for online e-KYC Aadhaar Biometric Authentication while
submitting your registration application.
A representative would then visit your address and use a scanner to match
your biometric readings with the information on the UIDAI database.

 Offline Aadhaar Paperless e-KYC

The offline Aadhaar e-KYC process involves the sharing of identity data via
XML or QR code. You can share the Aadhaar offline XML document with the
financial institution by downloading it from the UIDAI website.
3. Digital KYC
This type of KYC verification involves the geotagging of your live
photograph along with the Officially Valid Documents (OVDs). You can
upload scanned copies of the KYC documents online while submitting the
form. The digital KYC process then verifies the details entered against the
information on the geo-tagged documents.
4. Offline KYC
The offline KYC process is different from in-person, paper-based
verification. This type of KYC requires you to download and share your
Aadhaar Paperless Offline e-KYC document. You also need to provide your
consent so that the information in the document can be used for KYC
verification.
5. Central KYC (CKYC)
CKYC is the process of submitting the KYC documents and authenticating
your identity, after which, the KYC records are added to the central
repository. This central repository is maintained by the Central Registry of
Securitisation Asset Reconstruction and Security Interest of India (CERSAI)
and can be accessed using the 14-digit number assigned against the record.
6. Video KYC
As the name suggests, this type of KYC is done through a video. The process
may be assisted or non-assisted, but it is entirely paperless and online. For
fraud-free authentication, you need to submit the KYC documents and
record a video using a web portal or an app chosen by the financial
institution to verify your KYC. Post submitting, the application is manually
viewed and verified by an agent.

 Difference between Aadhaar authentication and Aadhaar e-KYC :

There are some differences between Aadhaar authentication and Aadhaar
KYC. In Aadhaar e-KYC, the service provider gets access to your data from
the UIDAI database, whereas Aadhaar authentication merely establishes
your credentials. Simply put, it is not necessary to provide demographic
details to get verified by Aadhaar authentication.

Conclusion:
Thus, eKYC is a paperless process to fulfill the mandatory KYC
requirements, before you begin your investment journey. KYC obligations
through Aadhaar-based eKYC can be completed if you are interested in
investing in stock markets. If you are interested in mutual fund investments
as per SEBI regulations - OTP-based eKYC mutual fund investments are
subject to the limit of only Rs 50,000 per annum and if you want more you
can avail of the process of In-Person Verification (IPV) or Biometrics-based
verification.

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 Cheque Truncation System

Meaning
Truncation is the process of stopping the flow of the physical cheque issued
by a drawer at some point by the presenting bank en- route to the paying
bank branch. In its place, an electronic image of the cheque is transmitted
to the paying branch through the clearing house, along with relevant
information like data on the MICR band, date of presentation, presenting
bank, etc.
 Cheque truncation thus obviates the need to move the physical
instruments across bank branches, other than in exceptional
circumstances for clearing purposes.
 This effectively eliminates the associated cost of movement of the
physical cheques, reduces the time required for their collection, and
brings elegance to the entire activity of cheque processing.
 Briefly explain the entire process flow in Cheque Truncation
System (CTS).
 In CTS, the presenting bank (or its branch) captures the data (on the
MICR band) and the images of a cheque using their Capture System
(comprising of a scanner, core banking or other application) which is
internal to them and meeting the specifications and standards
prescribed for data and images under CTS.
 To ensure security, safety and non-repudiation of data / images,
end-to-end Public Key Infrastructure (PKI) has been implemented in
CTS. As part of the requirement, the collecting bank (presenting
bank) sends the data and captured images duly signed digitally and
encrypted to the central processing location (Clearing House) for
onward transmission to the paying bank (destination or drawee
bank). For participating in the clearing process under CTS, the
presenting and paying banks use either the Clearing House Interface
 (CHI) or Data Exchange Module (DEM) that enables them to connect
and transmit data and images in a secure and safe manner to the
Centralised Clearing House (CCH).
 The Clearing House processes the data, arrives at the settlement, and
routes the images and requisite data to the paying banks. This is
called presentation clearing. The paying banks through their CHI /
DEM receive the images and data from the CCH for further
processing.
 The paying bank’s CHI / DEM also generates the return file for
unpaid instruments, if any. The return file / data sent by the paying
banks are processed by the Clearing House in the return clearing
session in the same way as presentation clearing and return data is
provided to the presenting banks for processing.
 The clearing cycle is treated as complete once the presentation
clearing and the associated return clearing sessions are successfully
processed. The entire essence of CTS technology lies in the use of
images of cheques (instead of physical cheques) for payment
processing.

BENEFITS
1. Benefits to Account Holders
 Account holders get a lot of benefits in terms of:
 No physical movement of cheques, hence no fear of loss of cheques in
transit.
 Quicker clearance, shorter clearing cycle, and speedier credit of the
amount to your account.
 Cheques getting cleared on the same day or within 24 hours.
2. Benefits to Various Customers of Banks
 Banks have various benefits from CTS which could be summarized as
under:
 Comparatively Shorter clearing cycle,
 Superior verification and reconciliation process,
 No geographical restrictions as to jurisdiction,
 Operational efficiency for banks and customers alike,
 Reduction in operational risk and risks associated with paper
clearing
 Scope for fraud is minimum
3. Other Benefits
 Time, money, and manpower expended on physical transfer of
cheques from banks to clearing houses are eliminated
 Clearing related frauds become less plausible
 Probability of cheques being misplaced in transit is eliminated
 CTS is more advanced and more secure.
 It provides quicker clearance of cheques
 Reduces operational risk and risks related to paper clearing
 There are no extra charges levied for the collection of cheques drawn
on a bank located within the grid, further providing no geographical
restrictions

Refer: https://www.livemint.com/news/india/what-is-cheque-
truncation-system-and-how-it-benefits-you-11617628948918.html

 National Financial Switch

Meaning
National Financial Switch (NFS) is the largest network of shared automated
teller machines (ATMs) in India. It was designed, developed, and deployed
with the aim of interconnecting the ATMs in the country and facilitating
convenience banking. It is run by the National Payments Corporation of
India (NPCI).
It was designed, developed, and deployed by the Institute for Development
and Research in Banking Technology in 2004, with the goal of
interconnecting the ATMs in the country and facilitating convenience
banking.
The goal of NFS is to connect all ATMs in the country, providing convenient
banking for all citizens of India. 

Features:

NFS has introduced a sub-membership model which enables smaller,
 regional banks including RRBs and local cooperative banks to
participate in the ATM network.
 NFS has maintained high standards of application and network
uptime of above 99.50% which has helped our member banks to
ensure the enhanced customer experience.
 The Bharat Clearing and Settlement System (BCS), has benefitted
members with high operational efficiency and ease of online
transaction life cycle management (chargeback, re-presentment, etc.)
in the network apart from being compliant with local regulatory
requirements.
 NPCI has also tied up with International card schemes like Discover
Financial Service (DFS), Japan Credit Bureau (JCB), and China
UnionPay International (CUPI) which allows their cardholders to use
ATMs connected to the NFS network.
 The Fraud Risk Management (FRM) solution is offered as a value-
added service to monitor transactions (in real-time) and to generate
alerts or decline transactions in the NFS network.

Other services offered in NFS:

 Mobile Banking Registration (MBR) - Allows cardholders to

register for mobile banking with their bank, if the mobile number is
already updated.
Earlier (The service enables cardholders of participating member
banks to register for Mobile Banking using any other participating
member bank’s ATM.)
 Card-to-Card Fund Transfer (C2C) - Allows cardholders to transfer
funds from their account to any other bank account through NFS
network ATMs.
Earlier (The service enables cardholders of participating member
banks to use NFS network ATMs of participating member banks for
initiating funds transfer to any other participating member bank’s
cardholder’s account.)
 Cheque Book Request (CBR) - Allows cardholders to place a
request for a Cheque Book through NFS network ATMs.
Earlier (This service enables cardholders of participating member
banks to request for Cheque Book using any other participating
member Bank’s ATM.)
 Statement Request (SR) - Allows cardholders to place a request for
a Statement of Account through NFS network ATMs.
 Earlier (This service enables cardholders of participating member
banks to request account statements using any other participating
member Bank’s ATM.)
 Aadhar Number Seeding (ANS) - Allows cardholder to seed their
Aadhaar number in their bank account.
Earlier (This service enables cardholders of participating member
banks to request for seeding of the Aadhaar number in the account
linked to the card using any other participating member Bank’s
ATM.)

Electronic funds transfer

MEANING
An electronic funds transfer (EFT) is a way to move money across an online
network, between banks and people. EFT payments are frequently used in
place of paper-based payment methods—like checks and cash—to make
transactions faster and safer.
Electronic funds transfer (EFT) is the electronic transfer of money from one
bank account to another, either within a single financial institution or
across multiple institutions, via computer-based systems, without the
direct intervention of bank staff.
For example, credit card payment processing is a form of EFT. Buying
things online triggers an EFT payment.

USE THIS FOR INTRODUCTION

Every transaction starts somewhere. In today’s global economy, e-
commerce is on the rise. Digital payment is the way of today, and tomorrow,
and that means any business, large or small, needs to take advantage of
electronic transactions. That is where electronic funds transfer comes in.
This concept is applicable to every digital transaction out there, and for
merchants, businesses, and consumers it’s important to know how
electronic money transfer’s work.
This is an electronic funds transfer explained.

What is the Electronic Fund Transfer Process?

An EFT transfer is usually very straightforward.
There are two parties: the sender of funds, and the receiver of funds.
Once the sender initiates the transfer, the request channels through a series
of digital networks originating from either the internet or a payment
terminal, to the sender’s bank, and then to the receiver’s bank.
Senders can be anyone from an employer, to a business, to an individual
paying a vendor for a service such as electricity.

Likewise, recipients can be entities like employees, goods suppliers,

retailers, and utility companies. Most payments are cleared, and that is
complete, within a couple of days.

Types of EFT Payments

FT payment methods vary. Every method of EFT offers ease and fast
delivery, which is why it’s become so popular. While EFT is preferred
worldwide, it’s important to know the various ways one can take part in
EFT payments. Here are the most common types of EFT:
Electronic Checks
In this payment, a digital check is generated upon the payer’s authorization.
E-checks are commonly used for vendor payments.
Direct Deposit
With direct deposit, funds are automatically deposited into an account with
little to no paperwork. This method is popular among employees. While the
automatic deposit requires almost no work on a regular basis, the deposit
needs to be set up, and this requires bank account information for the
recipient, among other potential information for entry.
Phone Payments
This is a casual transaction, and it occurs during a phone call. Usually, the
payee will supply their information, typically a card number, to the
recipient over the phone. The transaction will happen on the recipient’s
line. The payee does very little after verbal authorization. This is common
for utility payments.
ATM Transactions
A global convenience, ATM transactions occur at electronic kiosks found
throughout cities and banks all over the world. In this case, a person is
withdrawing cash from their bank account by inserting their debit card into
a machine, which will transmit information to the bank, and then process
the request to dispense money. It is an instant transaction.
Card Transactions
During the point-of-sale phase of a transaction, a credit card or debit card is
the most used form of payment around the world, replacing cash. This can
be in person or online and entails the swipe, dip, or entry of a card, during
which account information is electronically received and a payment
withdrawal is approved, then the payment is scheduled and processed
within a day or two.
Internet Transactions
The internet version of tapping, swiping, or inserting a card involves
manual entry into a point-of-sale field, followed by clicking a payment
button. This process does the same as the above, processing approval for
payment, and then transferring funds for payment within a couple of days.

NATIONAL ELECTRONICS FUND TRANSFER

National Electronic Funds Transfer (NEFT) is a nationwide centralized

payment system owned and operated by the Reserve Bank of India (RBI).
All NEFT settlements are made in a batch-wise format. Banks clear funds
transferred through NEFT on a half-hour basis, which means the receiver
will get the funds after half an hour from the time you initiate the
transaction. It was introduced in November 2005.

To initiate an NEFT transfer, Bank IFSC Code is a must, along with other

details such as bank account number, bank branch, and account holder
name, among other details.

There are no charges for NEFT transactions done via internet banking or
mobile banking apps. However, if you choose to conduct NEFT transactions
at bank branches, your bank may levy a nominal charge based on the
transfer amount.
With the world slowly shifting to online banking, the concept of NEFT has
become very popular in the country and is an easy way of transferring
funds. It eliminates the need to visit the bank to transfer funds, as you can
transfer funds while at home.

Process of NEFT transaction

Following is the step-wise flow of NEFT transaction.

Step-1: An individual / firm / corporate willing to transfer funds through

NEFT can use the internet / mobile banking facility offered by his / her
bank for initiating online funds transfer request. The remitter has to
provide details of beneficiary such as, name of the beneficiary, name of the
bank branch where the beneficiary has an account, IFSC of the beneficiary
bank branch, account type and account number, etc. for addition of the
beneficiary to his / her internet / mobile banking module. Upon successful
beneficiary addition, the remitter can initiate online NEFT funds transfer by
authorising debit to his / her account. Alternatively, the remitter can also
visit his / her bank branch for initiating NEFT funds transfer through
branch / off-line mode. The customer has to fill-in the beneficiary details in
NEFT application form available at the bank branch and authorise the
branch to debit to his / her account to the extent of the amount requested
in NEFT application form.

Step-2: The originating bank prepares a message and sends the message to

its pooling centre, also called the NEFT Service Centre.

Step-3: The pooling centre forwards the message to the NEFT Clearing

Centre, operated by the RBI, to be included for the next available batch.

Step-4: The Clearing Centre sorts the funds transfer transactions

beneficiary bank-wise and prepares accounting entries to receive funds
from the originating banks (debit) and give the funds to the beneficiary
banks (credit). Thereafter, bank-wise remittance messages are forwarded
to the beneficiary banks through their pooling centre (NEFT Service
Centre).

Step-5: The beneficiary banks receive the inward remittance messages from

the Clearing Centre and pass on the credit to the beneficiary customers’
accounts.

Advantages of NEFT
  You can transfer funds from any account of another account of any
NEFT-enabled bank within India.
 This facility is available 24/7, throughout the year, including holidays.
 Money is transferred within half an hour in a secured manner.
 Confirmation of transaction is sent to the remitter by SMS and email.
 You do not have to pay any charges for online NEFT transactions.
 You do not need cheques or demand drafts for these transactions.
 You need not visit your bank branch to send money via NEFT.
 You can also pay your credit card bill, loans, EMIs, and utility bills via
NEFT.

REAL TIME GROSS SETTLEMENT ( RTGS )

RTGS is a fund transfer facility was first introduced by the Reserve Bank of
India (RBI) in 2004. It is a system that allows continuous and real-time
transfer of funds. The word ‘real-time’ highlights the nature of the transfer
wherein the instructions are processed at the time they are received as
opposed to after a delay or waiting period. Subsequently, the term ‘gross
settlement’ means that the instructions for the transfer of funds are
handled on an instruction-by-instruction basis. ‘

This transfer method is generally designed for high-value transactions, and

you can use it for online and offline transactions. The minimum amount
that can be sent via this mode is Rs.2 lakh.

Advantages of RTGS

 Fund-transfers are done individually on a transaction-by-transaction

basis (without netting).
 It is a safe and secure system for funds transfer.
 RTGS transactions / transfers have no amount cap set by RBI.
 Online RTGS transactions can be done free of charge. However, RTGS
transactions done through bank branches may incur certain
transaction charges along with GST.
 The system is available on all days on 24x7x365 basis. There is real
time transfer of funds to the beneficiary account.
  The remitter need not use a physical cheque or a demand draft. The
beneficiary need not visit a bank branch for depositing the paper
instruments.
 The beneficiary need not be apprehensive about loss / theft of
physical instruments or the likelihood of fraudulent encashment
thereof.
 Remitter can initiate the remittances from his / her home / place of
work using internet banking, if his / her bank offers such service.

IMMEDIATE PAYMENT SERVICE (IMPS)

Short for Immediate Payment Service, IMPS is an instant inter-bank money

transfer service. The National Payment Corporation of India offers this
facility. Through IMPS, you can receive and send funds in real-time. It allows
inter-bank transactions through internet banking and mobile banking.
IMPS has become popular today because this service is available 24*7 and
365 days a year. IMPS is one of the most reliable and flexible modes of fund
transfers in India

Citizens could access the facility through multiple channels, such as mobile
phone, ATM, the internet, and SMS.

While there is no cap on the minimum transfer amount, the maximum

amount you can transfer per day via the Immediate Payment Service is INR
200,000.

It is built on the National Financial Switch (NFS), managed by NPCI

(National Payments Corporation of India), and approved by the Reserve
Bank of India (RBI). IMPS was introduced in 2010 as a pilot programme by
NPCI where only four banks offered the facility—State Bank of India, Bank
of India, Union Bank of India, and ICICI Bank. IMPS has now grown to 150+
banks.

NPCI then expanded IMPS and included YES Bank, HDFC Bank, and Axis
Bank later that year. On 22nd November, IMPS was launched publicly and
now includes 53 commercial banks, 101 districts/rural/urban, and
cooperative banks.
Fund transfer/Remittance can be done in the following ways
 Using Mobile number & MMID (P2P)
  Using Account number & IFS Code (P2A)

Using Mobile number & MMID (P2P)

IMPS offer an instant,24*7 interbank electronic fund transfer service
capable of processing person to person, person to account and person to
merchant remittances via mobile, internet and atms. It is a multichannel
and multidimensional platform that make the payments possible within
fraction of seconds with all the standards and integrity maintained for
security required for even high worth transactions.

Sender & Receiver - Have to register for Mobile Banking & get a unique ID
called "MMID"
 Generation of MMID is a One-time process
 Remitter (Sender) transfer funds to beneficiary (Receiver) using
Mobile no. & 7digit MMID of beneficiary.
 Note :

MMID - Mobile Money Identifier is a 7 digit code (of which the first four
digits are the unique identification number of the bank offering IMPS) Each
MMID is linked to a unique Mobile Number. Different MMIDs can be linked
to same Mobile Number (If you have different bank accounts, you will have
different MMIDs, even in the same bank.)

Using Account number & IFS Code (P2A)

Presently, IMPS Person-to-Person (P2P) funds transfer requires the

Remitter customer to make funds transfer using Beneficiary Mobile
Number and MMID. Both Remitter as well as Beneficiary needs to register
their mobile number with their respective bank account and get MMID, in
order to send or receive funds using IMPS.

There may be cases where Remitter is enabled on Mobile Banking, but

Beneficiary mobile number is not registered with any bank account. In such
cases, Remitter shall not be able to send money to the Beneficiary using
Mobile Number & MMID.
Hence on the merit of the feedback received from the banking community
as well as to cater the above-mentioned need, the IMPS funds transfer has
been made possible using Beneficiary account number and IFS code as well,
in addition to Beneficiary mobile number and MMID.

Benefits of IMPS
The features and benefits of IMPS which makes it a popular mode of fund
transfer are mentioned below:

1) Instant Fund Transfer

Staying true to its name, IMPS allows you to transfer funds in an instant.
This is because IMPS transactions occur individually and not in batches.
You can avail IMPS via online banking, mobile phone, ATM, or SMS. 

2) 24x7 Availability
IMPS is available 24x7 throughout the year, even on bank holidays. You
can use the service to transfer funds anytime and from anywhere.

3) Instant Notifications
Both you and the beneficiary are notified when the amount is debited
from one bank account and credited to the other. As a result, you do not
need to worry about whether the transaction was successful or not.

4) Versatility of Mode
IMPS can be carried out both person to person and person to merchant.
All you need is the mobile number or the bank account details.

5)  Safe and Secure

IMPS is carried out over encrypted servers, making the transfer of funds
safe and secure. Payments occur electronically using multi-step
verification.

6) Minimum Information Required

It saves time and effort as it does not require you to fill up lengthy forms
with confidential information. All you need is the beneficiary’s name,
mobile number, and MMID. Alternatively, you can transfer funds via
IMPS using just the beneficiary account number and IFSC Code.
7) Multiple Applications
Along with immediate transfer of funds, IMPS also allows you to pay
insurance premiums, utility bills, ticket charges, fees, online purchases,
etc.

8) Cost Efficient
Banks charge online a minimal amount for availing of IMPS facility. In
some cases, these minimal charges to are waived for transactions. As a
result, it is one of the most cost-efficient means of transferring funds.

9) It can be used to check the Aadhaar and bank account linking status.

Barcode
A barcode or bar code is a method of representing data in a visual, machine-
readable form. Initially, barcodes represented data by varying the widths,
spacings and sizes of parallel lines. These barcodes, now commonly referred to
as linear or one-dimensional (1D), can be scanned by special optical scanners,
called barcode readers, of which there are several types. Later, two-dimensional
(2D) variants were developed, using rectangles, dots, hexagons and other
patterns, called matrix codes or 2D barcodes.
The barcode was invented by Norman Joseph Woodland and Bernard Silver and
patented in the US in 1952.

What is QR Code Payment?

A QR code payment is an alternative to a contactless payment at the point of
sale, where an electronic funds transfer is performed through a mobile app by
scanning a QR code.

What’s UPI QR code payments

The UPI QR code is a digital payment acceptance channel accessible at the
establishment of business to facilitate customers paying with their UPI-
connected mobile app by scanning a QR code.

UPI (Unified Payments Interface) is a digital payment gateway that integrates

several banking features. Seamless fund routing, and merchant payments into a
single mobile application (of any participating bank).
Types of QR Code Payments
1.Static Style QR code
These QR codes cannot be tracked; however, by adding the URL to the QR
code, the QR code can be corrected. The URL of the destination website is
located directly inside the QR code.

2.Dynamic Style QR code

Dynamic QR codes offer editing capabilities, password protection, scan
analysis, and device-based redirection. Additionally, dynamic QR codes can
provide various information about scanned codes, such as how many people
scanned them, the type of device being used, and the location of the scanner.

Benefits of QR code Payments

You can connect with your potential customers in several different ways with
QR codes. Here are some of the benefits.

Payments made instantly

Paying instantly is one of the biggest benefits of QR codes. QR codes are
extremely fast because it takes only a matter of seconds to make payments
using them. To make payments using QR codes, a user simply has to open an
app, scan the QR code, and confirm to make the payment.

Touch Free Payment Solutions

To accept a few touch-free payments, you may not be able to justify
investing in equipment or redesigning your entire payment process. In
contrast, QR codes can be used without a touchpad by just printing them on a
standard printer.

Chargeback Reduction
The purpose of a chargeback dispute is to resolve a dispute regarding the use
of a credit or debit card. As a result of scan-to-play, chargeback liability is
reduced because the customer is inputting all the payment information, which
eliminates the possibility of chargebacks.

Paying with QR codes is Secure

QR codes generate a unique pattern that is unable to be hacked. The data
transferred via QR codes is encrypted, so payments are fool-proof and safe.
Check that the name and details of the merchant match up before the
transaction is processed so that the customer can verify the authenticity of the
transactions.

Providing affordable and reliable solutions

A QR code allows merchants to accept payments without having to set up a
card machine, and customers don’t even need debit or credit cards to make
payments. QR codes are easy to create through QR code generators and can
save merchants money.

NFS

National Financial Switch (NFS) is the largest network of

shared automated teller machines (ATMs) in India.[1] It was designed,
developed and deployed by the Institute for Development and Research in
Banking Technology (IDRBT) in 2004, with the goal of interconnecting the
ATMs in the country and facilitating convenience banking. It is run by
the National Payments Corporation of India (NPCI). As of 31st January 22,
there were 1,203 members that include 111 Direct, 1,045 Sub members, 43
RRBs, and 4 WLAOs using the NFS network connected to more than 2.55
Lac ATMs (including cash deposit machines/recyclers).

MEMBER BANKS
As of April 2017, the NFS Network connects total of 2,36,199 ATMs in India.
Among them 2,16,952 ATMs of 99 Direct Member banks, 4,058 ATMs of 692
Sub Member banks, 1,034 ATMs of 56 RRB Member banks and 14,146
ATMs of 8 White Label ATM providers, which is the largest number of ATMs
under a single network in India
SERVICES OFFERED IN NFS
NFS which is the largest domestic ATM network in the country member
banks has been in the fore front in providing inter bank ATM services to
maximum customers. Initially, the following basic transactions were
available in the NFS network

 Cash Withdrawal
 Balance Enquiry
 PIN Change
 Mini Statement
To enable the member banks of NFS to offer greater utility to their
customers, NPCI has introduced the below mentioned functionalities as
value added services to enable customers to use these services at any
participating bank ATMs.
Card to Card Fund transfer (ATM/Debit Card to ATM/Debit Card) : Using
this service, a Card holder of a participating NFS Member Bank will be able
to remit funds to another Card holder of a participating NFS Member Bank.
The funds will be transferred basis the Beneficiary's ‘Card Number’ which
the remitter will be required to input at the time of the transaction. The
main features of the service are mentioned below:

 Inter Operable
 Instant Fund Transfer
 24/7 Availability
 Paper Less
 Secure
 Better Fund Management
 Transaction Limits - The transaction limits are in accordance with
the RBI's circular on ‘Domestic Money Transfer’. Accordingly, for
cases where the Issuing and Beneficiary Cards are ‘Debit/ATM
Cards’, the per transaction limit will be Rs.5000 and the monthly
limit will be Rs.25,000 per remitter.
Cheque Book Request/Statement Request: At present, although statement
& cheque book request options are available at ATMs, these are available
only for customers of that particular bank. NFS aims to make this option
inter operable wherein customers will be able to avail the aforementioned
services at NFS member bank ATMs who avail this particular service from
NPCI.

MICR
Magnetic ink character recognition (MICR) is a technology used primarily
to identify and process checks. The MICR on a check is the string of
characters that appears at the bottom left of the check. It consists of three
groups of numbers, including the bank routing number, the
customer's account number, and the check number.The MICR includes,
from left, a nine-character routing number, a 12-character account
number, and a four-character check number.It is called a magnetic ink
character recognition line in reference to the print technology that is used
to enable a machine to read, process, and record information.
Benefits or advantages of MICR

Following are the benefits or advantages of MICR:

➨In spite of rough handling, one can read the MICR information with high
degree of accuracy.
➨The processing of MICR information is fast.
➨It offers greater security compare to OCR technology as printed
characters can not be altered.
➨There is no manual input and hence errors are reduced.
➨The characters can be read even if somebody write on them. This is due
to the fact that special ink containing iron particles is used to print the
characters.
➨The document is not easy to forge.
Drawbacks or disadvantages of MICR

Following are the drawbacks or disadvantages of MICR:

➨It can recognize only 10 digits & 4 special characters.
➨Alphanumeric characters are not used in MICR. Only certain characters
can be read.
➨It is more expensive method of data entry.

How Different is MICR Code From IFSC?

Simply put, the Indian Financial System Code (IFSC Code) is used to initiate
online or electronic money transfers from one bank to another within
India. On the other hand, you can use the MICR Code for global fund
transfers. IFSC Code represents only the bank code and the branch code.
But MICR denotes the pin code, bank code, and branch code.

EFT

An electronic funds transfer (EFT) is a digital transfer of cash through an

online payment system. An EFT can be performed within the same bank, or
between banks, and typically uses payment systems such as the Automated
Clearing House for ACH payments, Fedwire or SWIFT for wire transfers, or
credit card and debit card networks.
How Does Electronic Fund Transfer Work?

With the Electronic Fund Transfer System, the online fund transfer is
helmed by a few crucial parties. These include the sending bank, the
sending service branch, the sending EFT centre, the receiving EFT centre,
and the receiving service branch at the beneficiary bank. The below steps
explain how EFT works.

1. You place a fund transfer request in your bank.

2. The sending bank consolidates all such fund transfer requests and
sends them to the service branch.
3. The service branch transmits data to the EFT – the National Clearing
Cell (NCC), which is an automated clearinghouse.
4. The NCC transmits the EFT data to another NCC on the receiver end.
5. The receiving NCC processes the data and forwards it to the
beneficiary bank.
6. The bank branch credits the beneficiary account on the same
business day of receiving the transfer request.
Benefits of EFT System

Having explained EFT meaning in banking, let us examine its many

noteworthy benefits. The most apparent ones are as under:

24 x 7 Availability
You can place an EFT request 24x7x365. The RBI notifies banks and
customers in case services are halted.

Real-Time Transfers
EFT enables you to send funds to beneficiary accounts on a real-time basis.

Nation-wide accessibility
Since most banks are EFT-enabled, the process of transferring funds to any
corner of the country has now become hassle-free.

Zero Cost
The RBI does not levy fees on banks for EFT. Banks, too, pass on this benefit
to their customers for online ETF services but may impose nominal charges
for offline ETF payments.
Versatile Payment System
EFT is limited not only to fund transfers, but you may also use this facility
to pay your credit card dues and loan EMIs, initiate inward foreign
remittances and so on.

Disadvantages
However, there are a few drawbacks too as far as EFTs are concerned.
Some of them are:

 Highly technical. Not for everyone

 Fear of account being hacked
 Enhanced privacy breach risk
 Limit on daily transactions
 Limit on the maximum amount to be withdrawn daily
 Chances of identity theft by unscrupulous elements
 Needs a computer terminal or access to the internet at all times
 Crimes like phishing, credit cards theft have increased
 Leads to impulse buying behavior
 Not for illiterates
 Fraudulent bank websites are on the rise
 Dependency on the power supply

ECS

ECS is Electronic Clearing Service. ECS enables recurring payments on the

stipulated due dates.

ECS is one way of setting up standing instructions for recurring payments.

For example, it could be transferring a certain amount from one bank
account to another, payment of utility bills and EMIs, etc. Bulk credits like
payment of salaries, pension, dividend warrants etc., can also be done with
ECS. In addition, corporations and business organisations can leverage the
benefit of bulk credit through ECS.

Types of ECS Available

ECS Debit

ECS Debit enables payment of utility bills like telephone bills, electricity
bills, water bills, broadband bills, etc. You can also make EMI, SIP payments
with ECS debit. In addition, you should register for the ECS facility by
submitting an ECS mandate duly filled with the required details. This
process will eliminate the painful ordeal of remembering the due dates of
different payments. After registering for ECS, you have one responsibility,
i.e., maintaining sufficient balance on the due dates to honour the debit.

ECS Credit

ECS credit constitutes recurring credits like salary, pension or interest on

deposits that come into your account regularly. Normally Corporates and
business organisations use this facility where there is bulk credit of
salaries. Pensions, dividend warrants, bank deposit interest also get
credited automatically into the customer's account on respective due dates.

Depending on the location, ECS is further categorised as follows:

Local ECS: There are around 81 local ECS Centres across the country.

Regional ECS: There are 9 Regional ECS Centres across the nation

National ECS: National ECS is a centralised unit located in Mumbai.

Benefits of ECS
The Benefit of ECS for Banks

The following are the benefits of ECS for Banks.

 Minimal paperwork
 The workload is considerably reduced. On activation of ECS, all that
the bank has to do is match the account number and the name of the
beneficiary and allow credit.
 If the details do not match, ECS credit for that particular account will
be rejected.
 A thorough record of every transaction will be maintained.

The Benefit of ECS for Customers

 Need not remember due dates of recurring payments like utility bills,
EMIs, SIP etc., as it happens automatically once ECS debit is activated.
 Less scope for frauds.
 The need to visit a branch and sign a cheque for payment is
eliminated.
The Benefit of ECS for Organisations

 On activation of ECS Credit, bulk payments like salaries, pensions etc.,

becomes effortless as it happens automatically on the due date.
 Workforce requirements will be reduced.

Disadvantages:

 Rural areas are not served by the program, which only provides little
coverage.
 The electronic clearing mechanism takes a while to initially activate.
For the resolution of a disagreement, there is no online grievance cell
available.
 The ordering of things is crucial to systems. It might be difficult to
integrate new systems between those that are currently in place.
 Since they may be used by numerous systems, you should also
prepare ahead as much as you can for your data. 
 Modifying the contents of components could potentially cause a lot of
systems to fail.

How does ECS work?

ECS Mandate is nothing but a standing instruction given for debit of a

certain amount to the credit of a specific account mentioned in the
Mandate. It is an authorisation given to debit the bank account on a
specified date for a specified amount.

The Clearing House, on the specific due date, debits the bank account and
credits the amount to the beneficiary’s account. It could be a loan account,
bank account of another individual and, in case of utility bills, the
concerned organisation.

The ECS user can terminate the ECS whenever required without providing
any reasons.