NPCI is an umbrella organisation for operating retail payments and settlement systems in India, under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India. It has been incorporated as a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), in April 2009 with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems. The other objective was to facilitate an affordable payment mechanism to benefit the common man across the country and help financial inclusion.
The organisation is owned by a consortium of major banks started at the initiative of the Reserve Bank of India and Indian Banks Association (IBA). Initially, there were ten promoter banks viz. 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. In 2016, the shareholding was diluted to include 13 additional public sector banks, 15 additional private sector banks, 1 additional foreign bank, 10 multi-state co-operative banks, and 7 regional rural banks.
NPCI, during its journey with the aim of transforming India into a less-cash journey, has made a significant impact on the retail payment systems in the country and focusing on bringing innovations in the retail payment systems through the use of technology for achieving greater efficiency in operations and widening the reach of payment systems. NPCI on its commencement has taken over the National Financial Switch (NFS) from Institute for Development and Research in Banking Technology (IDRBT). Since its inception, NPCI has been expanding and extending the reach of both existing and innovative payment products for greater customer convenience. From a single service of switching of inter-bank ATM transactions, the range of services has now grown to Cheque Clearing, Immediate Payments Service (24x7x365), Automated Clearing House, Electronic Benefits Transfer and a domestic card payment network named RuPay to provide an alternative to international card schemes.NPCI also launched PaySecure for RuPay cards, an e-commerce system similar to PayPal’s that allows secure online payments. Until now, these cards worked only at ATMs and point-of-sale terminals at retail outlets.
NPCI has created a separate subsidiary to take its product to the global market. The organization is getting offers from nations around Asia, Africa, and the Middle East to improve its payment infrastructure. The internationalization of RuPay and Unified Payment Interface (UPI) is the primary focus of NPCI International Payments Limited (NIPL). NPCI also created a subsidiary company NBBL in December 2020. From April 2021, the new subsidiary NPCI Bharat Bill Payment System (BBPS) to increase growth especially in business to consumer segment for small businesses. This is done in view of growing traffic and workload from UPI, IMPS, Aadhar Enabled Payment System, and National Electronic Toll Collections.
Product and services of NPCI;
Aadhaar Payment Bridge (APB) System, that uses Aadhaar number for electronic crediting of government subsidies and benefits in Aadhaar-linked bank account which were earlier mostly done either in cash or cheque. Besides transferring the benefits and subsidies under DBT schemes, the system also serves the goal of financial inclusion and provides an opportunity to the Government to attempt financial re-engineering of its subsidy management program.
Aadhaar Enabled Payment System (AePS) is a system developed by the National Payments Corporation of India (NPCI). Banking, as well as non-banking transactions, can be performed through a banking correspondent of any bank. Under Aadhaar Enabled Payment System (AePS), the Aadhaar number is used not only to identify the beneficiary but also to authenticate transactions. The financial transactions/services include cash deposit, balance enquiry, Aadhaar to Aadhaar fund transfer. Nonfinancial transactions like – Demographic Authentication, Best Finger Detection (BFD), and e-KYC can be done under AePS.
Bharat Bill Payment System
The bill payment system in India has grown enormously over the years. The bill payments arise out of trade and service transactions including utility bills, taxes, and school college fees, etc. In our country, at present these payments are predominantly made through cash and cheques. Albeit, payment through electronic mode exists in India they do not fully address the needs of the majority of the population due to lack of accessibility across the country. In order to address this issue, the idea of establishing a pan-India touchpoint payment system was crept up. The Reserve Bank of India had initiated the groundwork for the creation of BBPS under a wide consultative process of study groups, stakeholders, and the general public.
The Bharat QR code is low cost, interoperable mobile-based universal payment solution which enables seamless transactions across banks for American Express, Master Card, RuPay, and Visa cardholders. The bank customers can pay for their purchases at merchant outlets by simply scanning BharatQR using their bank’s app. In short, customers need their bank app or BHIM app installed on their phones
BHIM (Bharat Interface for Money) is an Indian mobile payment App developed by the National Payments Corporation of India (NPCI), based on the Unified Payments Interface (UPI). BHIM is built over the Immediate Payment Service (IMPS) infrastructure and allows the user to instantly transfer money between bank accounts of any two parties and encourage cashless transactions.
Cheque Truncation System (CTS)
The Cheque Truncation System (CTS) is basically an online Image-based Clearing System (ICS). In this system of clearing, the collecting bank need not present the physical cheque to the drawee branch. The presenting bank captures the cheque images and Magnetic Ink Charecter Recognition (MICR) data from end to end precise scanners by using the Capture System. The electronic images of the cheques are then sent to the drawee branch through clearing house with the relevant information like the MICR fields, date of presentation, presenting bank etc. The security, integrity, non-repudiation and authenticity of the data and image transmitted between presenting bank and the paying bank are safeguarded by the Public
Mobile phone banking is a new revolution in banking system around the world. The mobile banking has several advantages; such as you can do internet banking, online shopping, and bills payment, or transfer of the amount to another account in a secure manner. With the advent of mobile phone banking, mobile phones are gradually replacing your wallets, Credit Cards, Debit cards etc. at any place using your mobile phone buttons.
National Automated Clearing House (NACH):
National Automated Clearing House (NACH) is a form of Electronic Clearing Service (ECS) which is available with core-banking enabled bank branches in India. NACH has primarily two variants viz. ECS Credit and ECS Debit. The facility is used by the bank customers for automatic debit to their account every month to pay certain bills like telephone bills, electricity bills, loan installments, insurance premiums, etc.
National Common Mobility Card:
National Common Mobility Card (NCMC) was launched in March 2019, with the tagline ‘One Nation One Card’. It is a single combo card offering a combination of a Debit / Credit with a prepaid card. A customer holding an NCMC card needs not to carry multiple cards with him for using the different purposes. The Debit / Credit component of NCMC would be used in the online environment whereas the prepaid component would be used in the offline environment, wherever offline payments are permitted. The customers may use these cards for payments across all segments including metro, bus, suburban railways, toll, parking, smart city, and retail. The service area feature of this card supports operator-specific applications like monthly passes season tickets etc.
National Electronic Toll Collection -FASTag:
The National Payments Corporation of India (NPCI) has developed the National Electronic Toll Collection (NETC) program to meet the electronic tolling requirements of the Indian market. It provides an electronic payment facility to customers to make the payments at national, state, and city toll plazas by identifying the vehicle uniquely through a FASTag.
National Financial Switch or NFS:
With the operational functions and services with in-house capabilities, the NFS network is now at par with most of the global ATM networks. Apart from basic transactions like Cash Withdrawal, Balance Enquiry, PIN Change, and Mini Statement, NFS also offers the following Value Added Services (VAS) to the customers of the banks on ATMs/CDMs:
RuPay Contact less card
National Payments Corporation of India (NPCI) said that it has introduced RuPay Contactless (Offline) feature. The card comes with a reloadable wallet feature where customers can store money to ensure quick and hassle-free transactions compared to regular credit/debit card transactions. Rupay Contactless is a contactless payment technology that allows cardholders to wave their card in front of contactless payment terminals without the need to physically swipe or insert the card into a point-of-sale device.
The international payment cards like VISA & Master cards have been charging heavily on card payment network services provided by them. With the introduction of RuPay cards, it has been able to provide transaction facilities to the extent of 40% cheaper than international networks. Thus, RuPay’s lower transaction cost helps Indian Banks to rapidly expand their card business to untouched markets of small towns and rural areas.
Unified Payments Interface (UPI)
Read main article: Unified Payments Interface (UPI) is a mobile based, 365x24x7 ‘fast payment’ system. Through UPI, users can send and receive money instantly by means of a Virtual Payment Address (VPA) set by the users themselves. The unique feature of VPA based transaction is the secure aspect of UPI architecture as it removes the need for sharing account or bank details to the remitter.
The state-of-the-art payment service *99# works on the Unstructured Supplementary Service Data (USSD) channel. This service allows mobile banking transactions using the basic feature of mobile phones, there is no need to have a mobile internet data facility for using USSD based mobile banking. The above service is intended to take the banking services to every common man across the country. It is planned to provide financial deepening and inclusion of underbanked society in the mainstream banking services. Read the full article: