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PAYMENT & SETTLEMENT SYSTEMS

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Presentation by S.R.Ramananda, Consultant – IT Solutions

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OBJECTIVE

• To know the mechanism of Payment & Settlement Systems

• To know various methods of Payment & Settlement Systems in use.

• To know about safe, secure , sound, Speed payment systems

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What is Payment System

• Transfer of value between debtor and beneficiary

• Settlement of payment obligation between seller and buyer in exchange of goods or services.

• Payment system is two way flow of payment and exchange of goods.

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Who Will Use Payment System

• Individuals,

• Banks

• Companies

• Government

• Any one who wants to make payments to discharge his obligations

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Types of Payment

• Cash• Cheque• DD• PO• TT

Electronic Physical

•ATM Card•ECS•Internet•Tele banking•Credit Card•Debit Card•RTGS•EFT / NEFT

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Traditional Methods of Payment

• Cheque clearing within and out side the place• Clearing operations / Clearing houses• More than 1000 clg houses managed by

RBI,SBI ,PSBs• Works under rules & regulations prescribed by

RBI• High value clearing• 3-10 days for out station cheque collection• Charges for collection• MICR & Non MICR Clg

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Role of RBI In Payment & Settlement Systems• As Settlement Bank as well as user• Introduced MICR In late 80s. • Introduced EFT/ECS in Mid 90s• Introduced RTGS in 2004• Up gradation, Refining, Increase Efficiency in

existing systems• Advancement of Technology • Formed Board for Payment & Settlement• Authorise ,form policies, set standards for

existing and future Payment Systems• Allot membership to Banks

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Payment systems abroad 

• CHIPS –Clearing House Inter-bank Payment System, a major payment system in the USA. 

• FEDWIRE –  another payment system operated by Federal Reserve Bank, USA. 

• CHAPS –  Clearing House Automated Payment System, equivalent to CHIPS in LONDON. 

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Payment Systems Abroad• TARGET – Trans-European Automated Real-Time

Gross Settlement Express Transfer System – an Euro payment system

• RTGS-plus and EBA – These are Euro clearing systems, with RTGS+, being a German hybrid clearing system and operating as an European oriented RTGS. 

• EBA-EURO 1- focus on cross border Euro payments.  -STEP 1 is another system of EBA for settling Retail  Payments.

• STEP 2 is also in use, which facilitates Straight through processing (STP) to member banks, using industry standards.

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Thanks youAny Questions Please