RTGS
Real Time Gross Settlement, abbreviated as RTGS systems are specialist funds transfer
systems where the transfer of money or securities takes place from one bank to any other
bank on a "real-time" and on a "gross" basis.
RTGS system is generally used for large-value interbank funds transfers operated and
organized by a country’s central bank.
RTGS systems, increasingly used by central banks worldwide, can help minimize the risk to
high-value payment settlements among financial institutions. Although companies and
financial institutions that deal with sensitive financial data typically have high levels of
security in place to protect information and funds, the range and nature of online threats are
constantly evolving.
Real-time gross settlement can allow a smaller window of time for critical information to be
vulnerable, thus helping mitigate threats. Two common examples of cybersecurity threats to
financial data are social engineering or phishing—tricking people into revealing their
information—and data theft, whereby a hacker obtains and sells data to others.
This system is maintained by the RBI, and is available during working days for a given
number of hours.
When using the banking method, RTGS is the fastest possible way to transfer money. ‘Real-
time’ means that the payment transaction isn’t subject to any waiting period. The transaction
will be completed as soon as the processing is done, and gross settlement means that the
money transfer is completed on a one to one basis without clustering with another
transaction.
The fundamental difference between RTGS and NEFT, is that while RTGS is based on
gross settlement, NEFT is based on net-settlement. ... RTGS transactions involve large
amounts of cash, basically only funds above Rs 200,000 may be transferred using this
system.
The facility of money transfer is available only for domestic transactions between banks
within the country.
Customers initiating RTGS transfer are required to have IFSC code of the beneficiary bank,
account number, name of the bank, account holder’s name.
The receiving and initiating bank branches are required to be RTGS enabled for transaction
processing.
The beneficiary bank has to credit the recipient’s account within 30 minutes of receiving the
fund’s transfer message.
RTGS is allowed for large value transactions with a minimum transaction amount of ₹
2,00,000.
RTGS timings- The Funds transfer request through RTGS Net Banking mode can be made
only from 08:00 am to 04:00 pm, from Monday to Friday and on Saturdays (excluding
second and fourth).
If the funds are not credited to the receiver’s account due to any reason, the funds will be
returned to the originating bank within 1 hour or before the end of the transaction day.
RTGS transactions can also be scheduled in advance within a timeframe of 3 working days.
The individuals can use RTGS facility for payments for cash management, hedging, interest
on loans, securities, suppliers, taxes, trade transactions, and trade settlement payment.
NEFT
National Electronic Funds Transfer (NEFT) is an electronic funds transfer system maintained
by the Reserve Bank of India (RBI). NEFT enables bank customers in India to transfer funds
between any two NEFT-enabled bank accounts on a one-to-one basis. It is done via
electronic messages.
NEFT or National Electronic Funds Transfer is an electronic fund transfer scheme that uses
internet banking or mobile banking to transfer funds from one bank account to another. The
funds are transferred in 23 half-hourly batches with the money being credited in the
beneficiary's account within a maximum of 2 hours.
NEFT services are now available on a round-the-clock basis i.e. 24×7, 365 days.
The system was launched in November 2005, and was set to inherit every bank that was
assigned to the SEFT clearing system. It was made mandatory by the RBI for all banks on
the SEFT system to migrate to NEFT by mid December 2005. As such, SEFT was
discontinued as of January 2006. The RBI welcomed banks that were full members of the
RTGS to join the NEFT system.
Banks No Longer Needed For NEFT, IMPS, RTGS; Google Pay, PhonePe & Other Fintech
Firms Can Do Them Now. Under a number of measures for digital payments that were
announced by the RBI, fintech companies have now been allowed to process RTGS and
NEFT transactions.
NEFT timings for Monday to Friday are 8 am to 6:30 pm, and for Saturdays, it is 8 am to 12
pm. Funds can be transferred via NEFT, by adding beneficiaries on the internet banking
portals of the required bank. There are no restrictions on the minimum and maximum
amount of transactions that can be made with NEFT. NEFT transfer charges range between
Rs 2.5 to Rs 25, based on the amount transferred.
NEFT transactions can be made by all kinds of account holders, whether individuals, firms or
corporates. However, this can be done, when the bank which holds the user account is
NEFT-enabled by the RBI. In some cases, one can also transfer funds via NEFT even
without a bank account. This can be done by making cash deposits at an NEFT enabled
branch and providing information such as name, address, email id, and contact number.
However, this can be done only for transactions up to Rs. 50,000 and not beyond.
There are no restrictions on the minimum and maximum amount of transactions that can be
made with NEFT. While minimum transactions can begin from Rs 1, maximum can range up
to any amount. However, the only restriction on NEFT transfer mounts is in case of a cash
deposit, as mentioned above, that range up to Rs 50,000.
SMART CARD
A smart card is a device that includes an embedded integrated circuit chip (ICC) that can be
either a secure microcontroller or equivalent intelligence with internal memory or a memory
chip alone. The card connects to a reader with direct physical contact or with a remote
contactless radio frequency interface.
The term “smart card” is loosely used to describe any card that is capable of relating
information to a particular application such as magnetic stripe cards, optical cards, memory
cards, and microprocessor cards. It is correct, however, to refer to memory and
microprocessor cards as smart cards.
Smart cards used as payment cards like credit/ debit cards. These are issued by commercial
companies or banks. Hospitals use these cards to store patient details. EBT (Electronic
benefits transfer) cards are used for the distribution of government benefits.
The benefits of smart cards are directly related to the volume of information and applications
that are programmed for use on a card. A single contact/contactless smart card can be
programmed with multiple banking credentials, medical entitlement, driver's license/public
transport entitlement, loyalty programs and club memberships to name just a few. Multi-
factor and proximity authentication can and has been embedded into smart cards to increase
the security of all services on the card. For example, a smart card can be programmed to
only allow a contactless transaction if it is also within range of another device like a uniquely
paired mobile phone. This can significantly increase the security of the smart card.
DIGITAL WALLET
Digital wallets are electronic payment systems that allow the user to store funds, make
online or in-store purchases, and track their payment history using a smartphone app or
similar device app feature.
It stores the details of all transactions on an online database. Many companies have their
own digital wallets. Paytm, Mobikwik, Alipay, American Express, Apple pay, Microsoft Wallet,
Samsung Pay, for example, are digital wallets. The largest companies to provide users with
this service are Google, Amazon, and Paypal.
The most famous digital wallet is Google Pay
Google Pay (stylized as G Pay; formerly Android Pay) is a digital wallet platform and online
payment system developed by Google to power in-app, online, and in-person contactless
purchases on mobile devices, enabling users to make payments with Android phones,
tablets, or watches.
The mobile wallet market in India is poised for significant growth as Indian consumers are
increasingly turning away from cash and card, says leading data and analytics
company Global Data.