National Payments Corporation of India – What is NPCI & its Services?

What is NPCI?

The National Payments Corporation of India (NPCI) is a vital organization responsible for managing and promoting retail payment systems in India. Established in 2008, NPCI was founded with the support of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA). The primary goal of NPCI is to create a robust, efficient, and accessible payment infrastructure that facilitates seamless and secure transactions across the country.

NPCI is owned by a consortium of 10 promoter banks, notably, State Bank of India, ICICI Bank, HDFC Bank, Bank of Baroda, Punjab National Bank, Canara Bank, Citibank, Union Bank of India, Bank of India, and HSBC India.

Latest Updates from NPCI

• For the 2024 TATA IPL Playoffs and Final matches, RuPay unveiled a special “On-The-Go” contactless payment collectible wristband. The exclusive strap allowed contactless payments and smooth access. It also included the autographs of TATA IPL captains. It could be used as an entry pass during events before being transformed into a contactless payment gadget, with PIN-free transactions of up to ₹5,000 and offline payments of up to ₹500.

• RuPay cardholders can now enjoy 25% cashback on in-store purchases in Canada, Japan, Spain, Switzerland, UAE, the UK, and the USA from May 15 to July 31, 2024. With a maximum cashback of ₹2,500 per transaction, this offer aims to enhance your shopping experience.

Who are the board members of NPCI?

NPCI’s Board of Directors are:

1. Dilip Asbe: Managing Director and Chief Executive Officer

2. Ajay Kumar Choudhary: Non-Executive Chairman and Independent Director

3. Shailendra Trivedi (RBI Nominee Director): Chief General Manager, Department of Information Technology

Independent directors include:

1. Prof. Rishikesha Krishnan: Director and Professor of Strategy, Indian Institute of Management, Bangalore

2. Padmini Khare Kaicker: Managing Partner, B. K. Khare & Co., Chartered Accountants (CA)

3. Dr. D. Manjunath: Professor, Department of Electrical Engineering, IIT Bombay

Nominee Directors representing promoter banks include:

1. Rana Ashutosh Kumar Singh: Deputy Managing Director (Retail – Personal Banking & Real Estate), State Bank of India

2. Nitesh Ranjan: Executive Director, Union Bank of India

3. Sanjay Vinayak Mudaliar: Executive Director, Bank of Baroda

4. Hemant Verm: Chief General Manager – Information Technology Division, Punjab National Bank

5. Siddharth Rungta: Managing Director and Country Head, Global Payment Solutions, HSBC India

6. Parag Rao: Country Head – Payments, Consumer Finance, Digital Banking and Technology, HDFC Bank Limited

Nominee Directors representing shareholders banks are:

1. Mahesh Kumar Bajaj: Executive Director, Indian Bank

2. Sumit Bali: Group Executive and Head – Retail Lending, Axis Bank Limited

What are the Objectives of NPCI?

NPCI’s main objective is to provide simple and secure transactions nationwide. NPCI aims to improve operational efficiency and expand the reach of retail payment systems via newer innovations, advanced technology, and improved infrastructure, thus making digital payments more accessible and efficient.

With RBI approval, NPCI operates several significant payment systems under the Payment and Settlement Systems (PSS) Act 2007:

• National Financial Switch (NFS): Largest network of shared ATMs across the country

• Immediate Payment System (IMPS): Allows real-time retail payments

• Affiliation of RuPay Cards: Regulating the affiliation of co-branded credit cards from non-banking financial companies (NBFCs) or other RBI-approved companies with RuPay Cards issued by banks

• National Automated Clearing House (NACH): Facilitating bulk push and pull paperless payments for both account and Aadhaar-based transactions

• Aadhaar Enabled Payment System (AePS): Improved accessibility through transactions endorsed by Aadhaar IDs

• Cheque Truncation System (CTS): Streamlining cheque processing

What is the Importance of NPCI?

• By making transactions faster and more accessible, NPCI has completely changed how India makes payments. It has significantly improved the effectiveness of financial operations.

• The growing number of cashless transactions is driven by its innovative technologies, such as RuPay and Unified Payment Interface (UPI), which have enabled direct account transfers.

• UPI doesn’t have any transaction costs and provides services from hundreds of banks and mobile payment applications. As per the NPCI data in June 2024, UPI processed 14.04 billion transactions in May, moving up from 13.3 billion in April, setting a new record.

  Currently accounting for 90% of transactions, UPI is expected to revolutionize retail digital payments over the next 5 years. The daily transaction volume is estimated to surpass 100 crore by FY27.

• NPCI has encouraged financial literacy and digital empowerment through digital payments. It has developed trust among merchants while making it easier for previously unbanked individuals to become included.

• Government efforts like the DigiDhan Mission have also supported the adoption of digital payments, which aims to increase the quantity of digital transactions in India.

How Does NPCI Work?

Payment Systems

NPCI operates several payment systems, including IMPS, NFS, UPI, NACH, Bharat Bill Payment System (BBPS), and RuPay, among others.

Interbank Transactions

Serving as India’s primary hub for all digital retail payment transactions, NPCI makes interbank transactions easier. A single identifier, such as a virtual payment address (VPA) or a mobile phone number, can be used to make transactions across bank accounts.

Settlement

Fund settlement between banks is handled by NPCI on a T+0 basis, implying same-date settlement of transactions. This ensures prompt and effective closure of interbank transactions by crediting or debiting money from the members’ settlement accounts.

Security and Risk Management

NPCI has established strong risk management and security frameworks to safeguard its data and systems. This covers encryption methods, two-factor authentication, fraud monitoring programs, and regulatory compliances.

Financial Inclusion

NPCI facilitates financial inclusion by providing flexible payment solutions for underbanked and unbanked populations. For example, AePS allows people to use Aadhaar authentication to access basic financial NPCI services, even in remote locations.

Collaborations and Partnerships

NPCI collaborates with financial institutions, banks, governing bodies, and technological partners to enhance its payment ecosystem. It participates in various projects to advance digital empowerment and financial literacy, such as the DigiDhan Mission.

Related Read: What is the Difference Between NEFT, RTGS, And IMPS

List of NPCI Products and Services

1. RuPay Card

RuPay provides debit and credit cards that are widely accepted at ATMs, point-of-sale terminals, and online retailers nationwide. The RuPay card aims to provide a simple and convenient e-commerce experience without sacrificing security or risks.

2. UPI

UPI enables users to send money instantly by utilizing a virtual payment address or mobile number. It integrates merchant payments and smooth fund routing and also supports peer-to-peer collect requests, facilitating convenient payments.

3. BHIM (Bharat Interface for Money)

BHIM is an NPCI product based on NPCI’s UPI-based transactions to enable instant payments. It allows managing your UPI PIN and balance, create QR codes, handle numerous accounts, and monitor transactions.

Related Read: What is the Difference Between BHIM and UPI?

4. NACH

NACH is a digital clearance service for improving the efficiency and security of recurring financial transactions through automation, such as, during loan EMI collections. It offers cost-effectiveness and a multi-level data validation facility.

5. IMPS

Round-the-clock IMPS service supplements NEFT and RTGS transactions with immediate fund transfers, helping customers in emergencies. IMPS transactions can be made with phone numbers as well.

Related Read: What is the Difference Between IMPS and NEFT Fund Transfer?

6. e-RUPI

e-RUPI is a contactless digital payment platform where specific goods or services can be paid for without a physical card or PIN. You can redeem the voucher at any retailer that accepts e-RUPI without needing a card, digital payment app or Internet banking access.

7. AutoPay

AutoPay helps users schedule automatic payments, such as recurring bills and loan installments. You can set up periodic e-mandates for EMI payments, bills, entertainment / OTT subscriptions, insurance, mutual funds, and other recurrent payments across any UPI application.

8. UPI Lite

UPI Lite is a simplified version of what is known as UPI today. It can execute transactions without needing a full-fledged UPI application. This version streamlines single-click authentication for UPI transactions under ₹500, leading to enhanced transaction success and reducing the load on the remitter bank.

9. AePS

AePS enables biometric verification via Aadhaar, eliminating the need for physical cards or PINs. Aadhaar-based identity verification fulfills the financial inclusivity goals of RBI, enabling digital retail payments, centralizing interbank transactions, and streamlining government entitlement payments.

10. National Electronic Toll Collection (NETC) FASTag

NETC FASTag authorizes electronic toll payments for FASTag-equipped vehicles. It offers near-real-time transaction processing. NETC’s ecosystem ensures interoperability by securely accepting the FASTag of any member bank. FASTag can be linked to your bank accounts or prepaid options without any prior ties.

11. *99#

*99# is a mobile payment system accepting USSD-based transactions. Aside from managing UPI PINs, you can also make interbank transactions and check balances. It is offered in 13 languages by all GSM carriers and 83 banks. Banks and telecom companies may communicate directly with customers using this special interoperable service.

Conclusion

India’s digital payments are expected to surge significantly in 2024 after growing exponentially over the last 10 years. UPI is expected to dominate digital payments, with NPCI aiming for 15-20 billion annual transactions. NPCI also aims to introduce various additional features which will benefit merchant settlements and value-added services.

Frequently Asked Questions (FAQs)

1. When was NPCI founded?

NPCI was founded in 2008 for retail payments in India. It was established by the Indian Banks’ Association and the Reserve Bank of India under the provisions of the Payment and Settlement Systems Act, 2007.

2. Who owns NPCI?

NPCI is owned by the RBI and a consortium of 10 promoter banks under the IBA. Additionally, as per Section 8 of the Companies Act of 2013, it is recognized as a non-profit organization.

3. What are some of the payment systems operated by NPCI?

NPCI operates many payment systems, including UPI, NACH, IMPS, BBPS, and RuPay. These technologies increase the efficiency of the financial ecosystem by making card payments, digital fund transfers, and identity verification easier.

4. What is RuPay and how is it different from other cards?

RuPay is an Indian domestic card payment network offering debit, credit, and prepaid cards. It differs from other cards because it is managed by NPCI and issued mainly by Indian banks, boosting domestic payments while lowering reliance on foreign payment networks.

5. What is Bharat BillPay and how can I use it?

Bharat BillPay is a centralized bill payment service in India that allows multiple bill payments through a single platform. You may use it to pay energy bills, insurance premiums, and other regular payments easily.

6. How does NPCI promote financial inclusion in India?

NPCI supports financial inclusion in India by providing inclusive payment systems, such as UPI and AePS, that offer banking services for underserved groups of people. It also works with banks and government programs to improve the availability of financial services in remote and rural areas.