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ATM, NEFT, RTGS, AEPS, MTSS, ECS In Detail

ATM, NEFT,RTGS,AEPS,MTSS,ECS In Detail


What is an ‘Automated Teller Machine – ATM’

An automated teller machine (ATM) is an electronic banking outlet, which allows customers to complete basic transactions without the aid of a branch representative or teller. Anyone with a credit card or debit card can access most ATMs. The first ATM appeared in London in 1967, and in less than 50 years, ATMs spread around the globe, securing a presence in every major country and even tiny little island nations such as Kiribati and the Federated States of Micronesia.

BREAKING DOWN ‘Automated Teller Machine – ATM’

There are two primary types of ATMs. Basic units allow customers to withdraw cash and receive reports of their account balances only. The more complex machines accept deposits, facilitate line of credit payments and report account information. To access the advanced features of the complex units, a user must be an account holder at the bank that operates the machine.

Analysts anticipate ATMs will become even more popular and forecast an increase in the number of ATM withdrawals. ATMs of the future are likely to be full-service terminals instead of or in addition to traditional bank tellers.

ATM Ownership

In many cases, banks and credit unions own ATMs. However, individuals and businesses may also buy or lease ATMs, on their own or through an ATM franchise. When individuals or small businesses such as restaurants or gas stations own ATMs, the profit model is based on charging fees to the machine’s users. Banks also own ATMs with this intent, but in addition, the convenience of an ATM is a service banks use to attract clients. ATMs also take some of the customer service burden off bank tellers, saving banks money in payroll costs.

ATM Fees

Account holders can use their bank’s ATMs at no charge, but accessing funds through a unit owned by a competing bank usually incurs a small fee. As of 2016, the average fee to withdraw cash from an out-of-network ATM is $4.52. Seattle boasts the lowest average ATM fees at $4.21, while Atlanta tends to have the highest average fees at $5.15. In 2014, consumers withdrew a total of $92 billion in cash from ATMs.

Using ATMs Abroad

For travelers, ATMs make it simple to access their checking or savings accounts from almost anywhere in the world. When travelers use foreign ATMs, they receive a better exchange rate than they would at most currency exchange offices. Additionally, using an ATM is easier than cashing traveler’s checks, and arguably, it makes travel safer, as the traveler doesn’t have to carry a lot of cash. However, the account holder’s bank may charge a transaction fee or a percentage of the amount exchanged. Most ATMs do not list the exchange rate on the receipt, making it challenging to track spending.

 

Core Banking Services (CBS)

Core Banking Services (CBS): It is a process under which information related to customer accounts and database information was done over electronic media. It stored in
It stored in the central server instead of branch server. Due to its high advantages, Central bank of India i.e. RBI made it compulsory to all Banks to implement Core Banking Services (CBS) as soon as possible.

1. NEFT – “National Electronic Fund Transfer”

  • It is a nation-wide payment system .
  • One can transfer funds to others though self-account.
  • Applicable to both Account holders and Non-Account holders.
  • Funds can be  transferred through electronic media
  • Funds can be transferred in 12 slots on weekdays and 6 slots on Saturday
  • Applicable for those customers, Corporates, Firms,whose bank is entitled with NEFT payment system.

Fast facts on NEFT

  • There is no minimum or maximum limit while transferring through NEFT platform.
  • If you have Bank account in any NEFT enabled branches , then you can transfer fund through internet or bank branches directly.
  •  If you don’t have an account, then there are few norms you need to follow, RBI sets an upper limit ceiling i.e. one can transfer up to Rs.50,000 per transaction.
  • NEFT mode can also be used while transferring fund to Nepal under Indo- Nepal Remittance Facility scheme. Here also RBI sets an upper limit ceiling i.e. one can transfer up to Rs.50,000 per transaction.
  • For these schemes, Banks charges as service charge or processing fee for each ENFT transactions.
  • While transferring NEFT fund you to anyone you must have His/Her Bank Accounts Details like Account Number , Account Holders Name , IFSC code.

2. RTGS-  “Real Time Gross Settlement”

  • Processing of instructions starts at the same time
  • Settlement of fund transfer occurs according to individuals basis or it can be transferred instantly. There is no such time slot.
  • Funds can be transferred in Real Time Basis.
  • RBI sets a limit, One can transfer a minimum of Rs.2 Lakh
  • The scheme is only applicable for those customers, Corporates, Firms,  whose bank is entitled with RTGS Payment platform system.

Fast facts on RTGS:

  • Only Account Holders can enjoy the service. There is no provision to transfer funds for Non-Account holders.
  • The customer can transfer funds in Between 9AM to 4:30PM on Monday to Friday. & 9AM to 1:30PM on Saturday.
  • But Bank transaction time is in between 9AM to 4:30PM on Monday to Friday. & 9AM to 3PM on Saturday.
  • As per RBI guidelines, Banks charges Rs.25 + Application time charge (Rs.5) A total of Rs.30 for each transaction in-between Rs.2 lakh to Rs.5 lakh.
  • However, Above Rs.5 lakh Bank charges Rs.50 + Application time charge

3. IMPS: Immediate Payment Services

IMPS is an instant interbank electronic fund transfer service through mobile phones.

Fast facts on IMPS:

  • This service is available 24×7 for a transaction between interbank.
  • It doesn’t require any “batches”. Though IMPS offers Instant Transfer.
  • To be able to transfer fund through IMPS route you must first register for the immediate payment services with your bank.
  • After successful registration, the bank will provide you “Mobile Money Identifier(MMID) and Mobile Personal Identification number(MPIN).
  • For transferring of funds the Minimum & Maximum amount is to be Rs.1 and Rs.2,00,000.

4. AEPS: AADHAR Enabled Payment System

  • It is a payment system which uses Aadhar card number and individuals online UIDAI authentication, which are linked to a customer’s Bank account.
  • A customer will have to register his/her Aadhar number to their existing bank account, provided their bank is AEPS enabled.
  • Through AEPS, the customer can withdraw or deposit cash, make the balance enquiry, and transfer funds.
  • The maximum amount of transaction per account per day is Rs.50,000.
  • These transactions are normally conducted by Business Correspondents (BCs) service centres.

5. MTSS: Money Transfer Service Scheme

  • It is a system of money transfer for transferring personal remittances from abroad to beneficiaries in India.
  • Through this only inward remittances into India are permissible. No outward remittance allowed.
  • A maximum of Rs.50,000 can be remitted inwards as per the money value. And a maximum of 30 transactions per the calendar year.

6. Nepal Remittance Scheme

  • It is a cross-border one-way remittance facility scheme for remittance from India to Nepal.
  • Maximum amount remittance is INR 50,000 and beneficiaries will receive in Nepalese Rupees.

 

ECS (Electronic Clearing System)

We all use electronic clearing system (ECS). It is a service your bank provides when you need to transfer funds from one bank account to another electronically.

In fact, it comes handy when you want to make periodic transactions electronically, like when you need to pay your loan EMI. While, we use this service day in and out, there are a few things we need to keep in mind to make the most of this service. To know more, read on.

You get an option to fix the amount of ECS. Reuters

Types: Did you know there were two types of ECSs? One is called the ECS credit, while the other is called the ECS debit. ECS credit is when an institution makes a credit to your savings account.

For instance, your dividends or even your salary. ECS debit is when you choose to make recurring payments, as EMI towards your loans, or SIP payments towards your mutual funds and the like. This ensures you don’t have to keep writing cheques every month and also decreases the possibility of missing due dates on various bills.

How much: You get an option to fix the amount of ECS. Alternately, you can also set a maximum limit and the auto debit amount will be as per your bill.

For instance, if you set an ECS for your credit card bill with a maximum limit of ECS for Rs 10,000 and your credit card’s total amount due for the month is Rs 8000, then an ECS of Rs 8000 will run. In fact, you can choose to set ECS for a minimum amount due as well as a fixed amount of your choice.

Start and Stop: To start an ECS for a utility company like your mobile phone bill, you need to fill in the ECS debit mandate with the mobile service provider and get the same endorsed by the bank. There is a good possibility that your bank might charge you a small fee to set an ECS mandate. To stop an ECS, ensure that you inform your bank in advance, so that they get enough time to take the necessary steps.

Warning: Take ECS very seriously because an ECS debit mandate is just like a cheque issued by you. This means, you need to ensure you have enough funds in the account, so that your ECS gets cleared. If you bounce an ECS, you will have to bear the same fines as you would have for a bounced cheque. And this could be as much as Rs 750. Keep in mind that your bank runs an ECS and there isn’t enough funds, bank may run an ECS again at a later date (usually a couple of days), that is after a few days. But, if you fail to have funds by that date, your ECS will bounce. Also, re-run of an ECS is not your right but dependent on your bank’s policy.

Always Check: ECS debit works well since they take away the pain of writing cheques, especially for recurring payments. It pretty much puts the cumbersome task of paying EMIs , SIPs and bills on auto pilot. But, you must monitor your savings accounts statements regularly to spot any inconsistency between the actual bill and the amount debited. So, use this tool to ensure that you pay bill on time and avoid late payment fees, as well as make use ECS debit as SIPs to build wealth over time.

 

Difference between NEFT and ECS

 

Meaning:

  • NEFT is a country-wide electronic fund transfer system used by banks from one to one.
  • ECS is an electronic fund transfer from one bank account to another bank account with the help of services provided by the clearinghouse.

 

Transaction volume

  • NEFT has high volume transactions with high value.
  • ECS has high volume transaction with low value.

 

Settlement time

  • NEFT settles transactions in batches.
  • ECS settles transactions in few days.

 

Charges

  • In NEFT, the charges varies from transaction value to transaction. NEFT is a cost effective for the customers.
  • There is no charges at all so it is cost free to all the customers.

 

Risk Associated

  • In NEFT, there is no risk involved to the customer because it automatically transfer the fund when due date and time occurs. Customer has no need to visit any branch of the bank or to remind.
  • In ECS also there is no risk involves like theft or a fear of fraudulent payment.

 

Registration

  • For NEFT, a bank must be a NEFT enabled to make the transaction electronically and speedy.
  • For ECS, There must be a registration with the approved clearing house to make payment through it.

 

Comparison between NEFT and IMPS

Basis
NEFT
IMPS
Meaning It is an electronic payment system used nationwide by banks to transfer money. It is an instant interbank mobile transfer facility by using a smartphone.
Settlement Time It means it takes some time to transfer money. It is an instant facility.
Working days It operates Monday to Saturday except for 2nd and 4th Saturday, Sunday and a holiday. It works on all days means 24×7 a day.
Transfer limit No limit for minimum and maximum transfer. No limit for minimum transfer and for maximum it is Rs.200000
No. of transactions 12 settlements per working day. Transactions occur continuously.
speed It is slower as compare to IMPS. It is very fast.
category It comes under electronic banking. It comes under mobile banking.
Fees It is fixed by banks. Differs from bank to bank.

 

Differences between NEFT and RTGS:

Criteria
NEFT
RTGS
Arrangement.
It is done in batches and it is slower.
It is a real-time transfer and it is faster.
Acronym.
National Electronic Fund Transfer.
Real Time Gross Settlement
Timings on weekdays and weekends.
8:00am-6:30pm(Mon-Fri)
8:00am-12:30pm(Sat)
9:00am-4:30pm(Mon-Fri)
8:00am-1:30pm(Sat)
Minimum transfer limit.
No minimum amount
 2 lakhs
Maximum transfer limit.
 No limit
No limit.
Credit in beneficiary account.
Happens in hourly batch between the banks.
Real-Time between the banks.
Charges as per RBI.
Up to 10,000:-Rs. 2.5
from 10,001 – 1 lakh :-Rs. 5
from 1 – 2 lakhs :-Rs. 15
Above 2 lakhs:-Rs. 25
Rs. 25-30 (Up to 2 – 5 lakhs)
Rs. 50-55 (Above 5 lakhs)
Beneficial
Small money transfer.
Large money transfer.

 

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