National Automated Clearing House (NACH) DIGITAL PAYMENT SYSTEM IN INDIA

 

National Automated Clearing House (NACH)

FOURTH DIGITAL PAYMENT SYSTEM

National Payments Corporation of India (NPCI) has implemented “National Automated Clearing House (NACH)” for Banks, Financial Institutions, Corporates and Government a web based solution to facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature. NACH System can be used for making bulk transactions towards distribution of subsidies, dividends, interest, salary, pension etc. and also for bulk transactions towards collection of payments pertaining to telephone, electricity, water, loans, investments in mutual funds, insurance premium etc.

National Automated Clearing House (NACH) is a centralized system, launched with an aim to consolidate multiple ECS systems running across the country and provides a framework for the harmonization of standard & practices and removes local barriers/inhibitors. NACH system will provide a national footprint and is expected to cover the entire core banking enabled bank branches spread across the geography of the country irrespective of the location of the bank branch.

With the implementation of NACH system, NPCI intends to provide a single set of rules (operating and business), open standards and best industry practices for electronic transactions which are common across all the Participants, Service Providers and Users etc. NACH system also supports Financial Inclusion measures initiated by Government, Government Agencies and Banks by providing support to Aadhaar based transactions.

The NACH system facilitates the member banks to design their own products and also addresses specific needs of the banks & corporates including a refined Mandate Management System (MMS) and an online Dispute Management System (DMS) coupled with strong information exchange and customised MIS capabilities.

The NACH system provides a robust, secure and scalable platform to the participants with both transaction and file based transaction processing capabilities. It has best in class security features, cost efficiency & payment performance (STP) coupled with multi-level data validation facility accessible to all participants across the country.NACH’s Aadhaar Payment Bridge (APB) System, developed by NPCI has been helping the Government and Government Agencies in making the Direct Benefit Transfer scheme a success. APB System has been successfully channelizing the Government subsidies and benefits to the intended beneficiaries using the Aadhaar numbers. The APB System links the Government Departments and their sponsor banks on one side and beneficiary banks and beneficiary on the other hand.

*99#, a USSD based mobile banking service of NPCI was initially launched in November 2012. The service had limited reach and only two TSPs were offering this service i.e. MTNL & BSNL. Understanding the importance of mobile banking in financial inclusion in general and of *99# in particular, various regulatory/trade bodies came together to ensure on boarding of all TSPs on *99# (USSD 1.0). With the wider ecosystem (11 TSPs), *99# was dedicated to the nation by Hon’ble Prime minister on 28^th August 2014, as part of Pradhan Mantri Jan Dhan Yojna .

 NPCI launched Unified Payments Interface (UPI) with member banks on 25^th August, 2016. UPI allows account holders across banks to send and receive money using a unique id known as UPI id or payment address. UPI allows users the facility to generate their own UPI ID. Besides UPI ID, user can also send money using the conventional financial address i.e. Account number + IFSC. Conceptualized as a mobile application based solution primarily catering to internet compatible phones (smartphone users) , UPI is now available for non-internet based mobile devices (smartphone as well as basic phones ) in the form of dialing option (*99# ) and is known as USSD 2.0 .This functionality i.e. USSD 2.0 is launched along with BHIM on 30^th December 2016.

 *99# service has been launched to take the banking services to every common man across the country. Banking customers can avail this service by dialing *99# on their mobile phone and transact through an interactive menu displayed on the mobile screen (available only for live TSPs). Key services offered under *99# service include, Sending and Receiving interbank account to account funds, balance enquiry, setting / changing UPI PIN besides host of other services. *99# service is currently offered by 83 leading banks & all GSM service providers and can be accessed in 13 different languages including Hindi & English. *99# service is a unique interoperable direct to consumer service that brings together the diverse ecosystem partners such as Banks & TSPs (Telecom Service Providers).

It is a common technology platform developed by NPCI which allows the Banks and TSPs to seamlessly integrate with each other to provide banking services to the customers at large over the mobile phones (basic as well as smartphone).

 Currently, following Financial, Non-financial and Value Added Services (VAS) are offered through *99# service.

 Financial Services       Sending Money using Mobile No

Sending Money using UPI ID

Sending Money using Account No. + IFSC

Requesting Money using UPI ID / Mobile No.

Non-Financial Services           Account Balance

Set UPI PIN

Change UPI PIN

Last 5 transactions

Features of *99# Service

Uses USSD as the access channel that works across all GSM handsets (smartphone or otherwise) making it reach the last mile user

Supports menu-based applications that is easy to maneuver for the users

Does not require data connectivity (works on signalling channel) that makes it high availability service

Round the clock availability (works even on holidays)

Accessible through a common code *99# across specific GSM Operators and mobile handsets

Additional channel for using BHIM app and key catalyst for financial inclusion

OTHER DIGITAL PAYMENT SYSTEN IN INDIA

• IMMEDIATE PAYMENT SYSTEM (IMPS)
• Aadhaar Enabled Payment System (AePS)
• RUPAY