Payment & Settlement System

Payment & Settlement System In India

With the rise in the digital presence of Indians, online transactions have gained enormously over the last few years. We will discuss some most widely used payment settlement ways.

RTGS:

RTGS stands for Real Time Gross Settlement.

The minimum transaction is 2 lakhs with no cap on the maximum transaction. And it is primarily used by institutions, large merchants, and businesses to transfer funds.

NEFT: 

NEFT Stands for National Electronic Funds Transfer

NEFT transactions are settled once every 30 minutes. And there was no minimum transaction value. You can send amounts as low as ₹1 with no cap on the upper limit.

IMPS:

IMPS Stands for Immediate payment service.

You could transfer funds up to ₹5 lakhs with no cap on minimum transaction amount, on a real-time basis. It offers a 24*7 rapid domestic cash transfer service. The settlement between banks in IMPS is on a deferred net basis - the transactions are settled between banks at the end of the day where only a net amount has to be transferred.

UPI:

UPI Stands for Unified Payment Interface. It is developed by NPCI.

UPI allows you to instantly transfer funds through your mobile 24x7. It also permits the “Peer to Peer “collection requests that can be scheduled and paid as per requirements.

When it comes to the payment system in the world, India has arguably the most efficient payment system. In this regard, RBI has done a good job of creating various payment routes to enhance the customer experience.

However, with the rising trend of Digital Adoption, payment fraud is also increasing day by day with the help of innovative ways. like Fake UPI Links, OTP-related frauds, QR Code scams, phishing & social engineering scams etc.

We need systems and processes to tackle this type of issue & robust grievances system.

Security and convenience in payment and settlement systems are the most important things to look forward in the era of tech advancement and the latest digital infrastructures.

As you know, RBI recently launched a pilot program of Central Bank Digital Currencies(CBDC) i.e E-rupee which is seen as the next big thing in the payment and settlement system after UPI.

Features of CBDC:-

1. Transactions via Digital wallet offered by participating banks, stored on mobile.

2. Transactions can be Person to Person (P2P) & Person to Merchant (P2M).

3. Payment to merchants via QRCodes

4. It will be issued & regulated by RBI.

5. It is available in offline mode also & reduces cash dependency.

From the Author Desk,

Comment below what are your view's on CBDC. Use Comment Section. 

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