Prelims: Economy (Banking), Third-Party Application Provider, NPCI
Mains: General Studies-III Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
Why in the News ?
The Reserve Bank of India has asked the National Payment Council of India to examine the request of One97 Communications, which owns Paytm, to become a Third-Party Application Provider for continued Unified Payments Interface operation of the Paytm application
Source: IE
Key Facts 🗝️
NPCI:
- It is an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, to create a robust Payment & Settlement Infrastructure in India.
- It has been incorporated as a “Not for Profit” Company under the provisions of Section 25 of the Companies Act 1956 (now Section 8 of the Companies Act 2013).
About:
Third-Party Application Provider (TPAP)
- It is an entity that provides the UPI compliant app(s) to the end-user customers to facilitate UPI-based payment transactions.
- These applications could be mobile wallets, merchant apps, or any other platform that utilises UPI for payments.
- NPCI (National Payment Corporation of India) ,the umbrella organisation for operating retail payments and settlement systems in India, owns and operates the UPI platform.
- Working of TPAPs
- TPAPs leverage the UPI infrastructure provided by NPCI and work with payment service providers (PSPs) and banks to facilitate transactions.
- They are responsible for ensuring that their applications adhere to security standards and compliance guidelines set by NPCI.
- As per the current regulations, payment service providers (PSPs) need to obtain a TPAP license from NPCI to run UPI services and facilitate merchant transactions through partner banks.
- Currently, there are 22 NPCI-approved 3rd party Unified Payments Interface (UPI) apps that can be used to send and receive money from other UPI users by using UPI IDs.
- They include Amazon Pay, Google Pay, Groww, Jupiter Money, Mobikwik, Phonepe, Samsung Pay, TataNeu and Whatsapp.
National Payments Corporation of India (NPCI):
- It is an umbrella organisation for operating retail payments and settlement systems in India.
- The Company is focused on bringing innovations in the retail payment systems through the use of technology for achieving greater efficiency in operations and widening the reach of payment.
- NPCI is promoted by ten major banks, including the State Bank of India, Punjab National Bank, Citibank, Bank of Baroda, and HSBC.
- The regulatory board of the NPCI, headquartered in Mumbai, includes nominees from the RBI along with nominees from ten core promoter banks.
- Payment systems that the NPCI can operate include National Financial Switch (NFS), Immediate Payment System (IMPS), Aadhaar-enabled Payments System (AEPS) and National Automated Clearing House (NACH).
- Services Offered by NPCI:
- Bharat Bill Payment Interface (BBPI): It was developed by the NPCI to help the retail payments sector. With the introduction of the BBPI, a single platform has been made for aggregators and 0billpayers.
- Immediate Payment Service (IMPS): It gives you the option to transfer funds immediately. The facility is available at any given time. The beneficiary details must be added to transfer funds via IMPS. You can add the IFSC code and the account number to transfer funds via IMPS.
- RuPay: NPCI introduced RuPay so that average citizens can make financial decisions. RuPay is an affordable card and can be issued as credit cards, debit cards, and prepaid cards. More than 300 million RuPay cards are in India.
- USSD Services: Unstructured Supplementary Service Date (USSD) was introduced by the NPCI to allow individuals to make banking solutions without the need for the internet or smartphones.
- BHIM: BHIM uses UPI to complete payment transfers. You can make payments via BHIM by entering the Virtual Payment Address (VPA) or the registered mobile number. No smartphone is required to transfer funds via BHIM.
- UPI: United Payments Interface (UPI) allows you to transfer funds from your smartphone. However, you will need to link your bank account to complete payments via UPI. Money is transferred directly from one bank to another.
UPSC CSE EXAMS Corner
Prelims: PYQ/FAQ
Q. Consider the following statements:
1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country.
2. NPCI has launched RuPay, a card payment scheme.
Which of the following statements given above is/are correct?
A) 1 only
B) 2 only
C) Both 1 and 2
D) Neither 1 nor 2
Ans: C. Both 1 and 2
Explaination:
-
- National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India. NPCI, during its journey, has made a significant impact on the retail payment systems in the country.
- Dedicated to the nation by our former President, Shri Pranab Mukherjee, endorsed by the Hon’ble Prime Minister, Shri Narendra Modi and later made the card of choice for the ambitious Pradhan Mantri Jan Dhan Yojana, RuPay is now a known name. RuPay is an indigenously developed Payment System – designed to meet the expectation and needs of the Indian consumer, banks and merchant eco-system. RuPay supports the issuance of debit, credit and prepaid cards by banks in India and thereby supporting the growth of retail electronic payments in India.
