Profile
Settings
Refer your friends
Sign out
Many systems have been developed so far for financial transactions across the globe. In India, multiple payments and transaction systems are used for it. The Reserve Bank of India regulates these systems. Real-Time Gross Settlements (RTGS), National Electronic Funds Transfer (NEFT), Electronic Clearing Service (ECS debit and ECS credit), credit cards, debit cards, Immediate Payment Service and Unified Payment Interface (UPI) are used for settlements. The country is growing fast in the segment of digitalisation. The transaction systems are advancing rapidly, bringing more security, efficiency and ease. The main types of systems prevailing are discussed below.
RTGS
The Real-Time Gross Settlement started in 2004, is a payment network maintained by the RBI. As its name indicates, this transaction mechanism transfers funds from one bank account to another on a real-time and gross basis. Such transaction has no waiting period. It is settled without involving it with any other transaction. RTGS minimises the risk of credit amount due to lags as the settlement is instant and irreversible.
NEFT
The National Electronic Funds Transfer system started in 2005 by the RBI, enables customers in India to make transactions between any two accounts that are NEFT enabled. It is an electronic fund transfer system in which funds are settled in hourly batches, i.e. not on real-time bases. As of now, the facility is available both offline and online. It can be done in banks by filling NEFT form and online through internet banking. There is no limit on the number of funds that bank customers can transfer.
ECS credit
Electronic Clearing Service credit is a payment method usually performed by an organisation where there is a need to make mass or repetitive payments to a large number of recipients. This system eliminates the delay due to the machinery for printing and rectification.
The ECS users acquire account details of the beneficiaries for engaging in the transaction. The service is free of charge for both sponsor banks and destination banks. It is used to pay salaries, surplus or commissions.
ECS debit
Electronic Clearing Service debit is a debit-pull provision used primarily for small transfers from individuals to big companies. It enables payments like mobile bills, insurance and electricity bills. The number of users is increasing at a very high rate due to rapid digitalisation. The ECS debit cards make up nearly 3/4th of the total cards prevailing. Customers do not need to view payment by the last date. The user also saves management machinery for check accumulation by observing the consistency.
While using, banks levied ECS debit return charges if there is a non-availability of funds in the beneficiary account. ECS debit return charges are also levied along with late payment fees if the Equated Monthly Installment (EMI) fails to withstand. To ease the banking experience, a bank customer can fill out an ECS debit mandate form. The signed document is the official proof that the beneficiary account holder has authorised the bank to make ECS debit or credit deductions. ECS debit mandate will automatically deduct the amount on the due date of payments. The ECS debit mandate form allows the customer to set a maximum limit that can be debited automatically. The users can monitor these debits.
Due to increasing awareness among individuals about different modes of transactions, e-banking facilities like ECS debit and ECS credit are rising. People nowadays take advantage of online RTGS and NEFT services. The electronic instructions generated by clearing systems and physical cheques are equally treated. If a user wants to discontinue the ECS scheme, a written application must be given to the bank channelling the payment. A letter stating that the user wants to suspend the service provided must also be given to the service provider.
Conclusion
We have now reached the end of the article. You must have got a clear picture of the different systems introduced for digital financial transactions. All these systems were introduced to make payments easier for people. The transaction systems have advanced rapidly, bringing more security, efficiency and ease.
