System that facilitates transfer of money from a payer to the beneficiary. It includes both paper-based payments such as cheques, drafts as well as electronic payments such as Real Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT), Immediate payment Service (IMPS), UPI etc.
Payment and Settlement Act, 2007
- Empowers the RBI to regulate and supervise the payment and settlement system.
- Reserve Bank is authorized under the Act to constitute a Committee of its Central Board known as the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS)
- No entity can operate payment system in India without the prior approval from the RBI.
In pursuance of these powers, the RBI has authorised various Payment System Operators (PSOs) such as CCIL (financial market infrastructure - central counterparty), NPCI (retail payments organisation), card payment networks, ATM networks, PPI issuers, Instant Money Transfer operators, TReDS platform providers
- RBI’s guidelines: Under the Payment and Settlement Act, 2007, two Regulations have been made by the Reserve Bank of India, namely, the Board for Regulation and Supervision of Payment and Settlement Systems Regulations, 2008 and the Payment and Settlement Systems Regulations, 2008.
- Payment Systems under RBI: Real Time Gross Settlement (RTGS) and National Electronics Fund Transfer (NEFT). The RTGS system is used for high-value transactions wherein minimum transaction amount should be Rs 2 lakhs and above. Both NEFT and RTGS are available 24 X 7 on all days, including holidays.
Payment Systems Under National Payments Corporation of India (NPCI)
Umbrella organization for operating retail payments and settlement systems. It is an initiative of RBI and Indian Banks’ Association (IBA).
- Unified Payments Interface: Real-time interbank payment system for sending or receiving money.
- RuPay Card
- BHIM App: BHIM is a mobile app for Unified Payments Interface. The BHIM apps have 3 levels of authentication.
- Bharat BillPay: One-stop ecosystem for payment of all bills
- Immediate Payment Service: Real time interbank payment system
- National Financial Switch: Network of ATMs in India.
- BharatQR: A common QR code built for ease of payments
- National USSD Platform: Enables banking related transactions on feature phones without internet connection. Feature phone users can avail various services by dialling *99#.
- Positive Pay system: Used for clearance of cheques.
- National Automated clearing House (NACH): Facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature.
Card networks operated by Non-banks: Visa, MasterCard, American Express etc.