e-payment clearance

Real time e-payment clearance on cards

Customers may soon be able to make payments towards utility services or equated monthly installments on loans on a real time basis. The Reserve Bank of India is looking at expanding the reach of the electronic clearing service to a national scale. Currently, this service is available only at 15 centres, where the central bank manages the clearing house operations. Addressing a conference on mobile payments, the central bank’s executive director, RB Barman said: “While the national electronic fund transfer takes one to two hours for settling the transaction, this would help finish the process in a few seconds. We are also looking at releasing the final guidelines on mobile banking over the next fortnight.” Mr Barman said that 53 banks have joined in the pilot project for cheque truncation services in the National Capital Region. He added that RBI may extend the cheque truncation service to facilitate clearing of cheques across different cities. Customers can transfer funds from one bank to another, through the ECS i.e. by routing the transaction through a clearing house. Typically, many corporates use the ECS for bulk transfers of salaries, interest and dividend payments. Retail customers at banks can also use the ECS debit facility to make utility payments towards telephone or electricity, taxes or loan installments.
On the other hand, the NEFT system helps transfer funds across India between bank branches, but the funds get credited within few hours of the execution either on the same day or on the following day, depending upon when the transaction is settled. Till date, 46,363 branches of 87 banks are covered under the NEFT system, which RBI is looking at widening further. The central bank launched the NEFT system in November 2005. While RBI gives banks the option to decide whether they wish to join the network for real time gross settlements, rolling out ECS systems on a national scale will automatically bring all branches under a single platform. PayPal, a Singapore-based online payments solution provider, is also in talks with RBI. The central bank has sought from PayPal, certain insights on how online payments are regulated globally, with special reference to know-your-customer norms. Also present at the conference, TechProcess Solutions’ CEO, Bikramjit Singh, which acts as a intermediary between banks and merchant establishments, said, “most of the transactions still cater to the higher-end needs of customers and in that sense, electronic payments have still not penetrated to the ground level masses. The main deterrent under mobile banking is the lack of regulatory norms as of now.”