Skip to content
- Baked by Fiat money
- Easy to transfer
- Exact amount can be transferred
- Legally recognized for high value payment
Negotiable Instruments Act, 1881
Bill of Exchange
- 3 parties: future dated promise for payment
- Requires ‘ stamping’
- 3 parties: drawer, Drawee (Bank), Payee (recipient)
- .No ‘stamping’, but sign req, may be crossed
- Types depends on date
- Stale – lapsed for not withdrawn in 3 months
- Postdated – After a specific date
- Before a specific date
- Types depends on crossing
- Open cheques or travel cheques
- Crossing – no cash, deposited in account
- I promise to pay bearer the sum of – 2 parties
- Not fiat-money though.
By usage or custom
- Hundis, Share warrants, Dividend warrants, Bankers draft, Circular notes, Bearer debentures, Railway receipts, Delivery orders.
- centralized system established by a bank which allows its customers to conduct their business irrespective of the bank’s branch.
- It removes the impediments of geo-specific transactions.
- Core banking solution for RBI
Immediate Payment Service (IMPS)
- It is an instant payment inter-bank electronic funds transfer system in India.
- It is available 24/7 throughout the year including bank holidays.
- It is managed by the National Payments Corporation of India (NPCI)
- In 2010, its built upon the existing National Financial Switch network
- Max Amount 10k for mobile and 2 lac for IFSC
Real-time gross settlement (RTGS)
- It transfers money or securities from one bank to another
- Its a “real time” and a “gross” basis system
- Operated by RBI
- Available in weekdays only
- Min amount – 2 lac, Max amount – 500 Cr.
National Electronic Funds Transfer (NEFT)
- It is an electronic funds transfer system
- Maintained by RBI
- Started in November 2005
- Setup was established and maintained by Institute for Development and Research in Banking Technology (IDRBT).
- NEFT settles fund transfers in half-hourly batches
- It has 23 settlements windows between 8:00 AM and 7:30 PM
- It works on week days and the 1st, 3rd and 5th Saturday
- Transfers initiated outside this time period are settled at the next available window
- Max amount 10 lac
Indian Financial System Code (IFS Code or IFSC)
- It is an alphanumeric code that facilitates electronic funds transfer in India.
- A code uniquely identifies each bank branch participating in the two main Payment and settlement systems RTGS and NEFT
- It is an 11-character code
- First 4 alphabetic characters representing the bank name
- Last 6 characters representing the branch
- 5th character is 0 (zero) and reserved for future use
10 k mobile 2 lac IFSC
Electronic Clearing Service
- payments are made on a timely-basis like monthly, a year, half a year, etc.
- It used to pay monthly bill, salaries, dividends or commissions, Direct benefit transfer
- Over time it has become one of the most convenient methods of making large payments
- Maintained by RBI in national level
- Maintain by NPCI
- Same work as ECS
Classification of Digital Payment Service Provider
- Cross Border Money Transfer – Western Union and Moneygram
- Instant Money Transfer Outbound – Empays
- Financial Market Infrastructure – Clearing Corp. of India
- Retail payments – NPCI
- Card Payment network – Visa, Mastercard
- M-walet or PPI – paytm, Phonepe
Automated teller machine (ATM)
- ATM works through National Financial Switch (NFS).
- All the transaction use Core Banking Solution
- HSBC 1st installed ATM in india
- 3 types ATM
- Banks – own by banks
- Brown Label – outsourced by banks
- White Label – Non Banks by the help of sponsor bank
Card Payment type
- Debit Card
- Credit Card
- Prepaid card – Need to recharge
- Magnetic – Data on magnetic strip
- Chip Based – Data on chip
- RFID – Radio Frequency Identification Ex-Fastag
- NFC – near field communication tech