What is IMPS?
Introduced
in 201o, Immediate Payment Service or IMPS, is -- as the name suggests -- a
‘fast payments’ system. It provides 24x7 instant domestic funds transfer
facility. India was the fourth country after South Korea, South Africa and the
United Kingdom to introduce it.
This facility is provided by the
National Payments Corporation of India (NPCI), an umbrella organisation for
operating retail payments and settlement systems in India, through its existing
NFS switch.
The system provides for real time
transfer of funds between the remitter and beneficiary with a deferred net
settlement between banks.
One can transfer money via IMPS
by using various channels like internet banking, mobile banking apps, bank
branches, ATMs, SMS and Interactive Voice Response System, i.e. IVRS. Besides
banks, the system allows non-bank entities such as Prepaid Payment Instrument
(PPI) issuers to participate and facilitate remittances from wallets to the
recipient bank accounts
Presently, IMPS person-to-person
(P2P) funds transfer requires the remitter to make the transfer using the
Beneficiary Mobile Number and Mobile Money Identifier or MMID.
Both remitter and the beneficiary need to link their mobile
numbers with their respective bank accounts and get MMID, in order to send or
receive funds using IMPS.
Initially, the system required
both the remitter and the beneficiary to be registered for mobile banking which
was inhibiting the growth. Hence, the system was upgraded to enable remittance
of funds by using other parameters such as account number and IFSC code or by
using bank account linked Aadhaar number.
Any entity with a valid banking
or prepaid payment instrument (PPI) licence from the Reserve Bank of India is
eligible to participate in IMPS.
In IMPS, a transaction is
received at National Payments Corporation of India or NPCI for routing to the
beneficiary bank only after the remitting bank has debited the remitting
customer’s account. Therefore, the risk of a remittance being made with the
remitting customer not having adequate funds is addressed.
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