Electronic Funds Transfer Systems

#Banking | #Payments : KPMG India's document outlines the Reserve Bank of India (RBI)'s (RBI) guidelines for the National Electronic Funds Transfer (NEFT) and Real-time Gross Settlement (RTGS) payment systems, effective March 2025. It details the objectives and applicability of these guidelines, emphasizing enhanced efficiency, security, and customer protection. The document specifies access criteria for participating members, including financial requirements and necessary licenses, as well as technology requirements covering network security, vulnerability management, and disaster recovery. Furthermore, it presents a phased approach for organizations to achieve compliance with these #cybersecurity guidelines, highlighting the need for annual audits and ongoing monitoring.

𝐋𝐈𝐍 𝟑𝟏𝟕 : 𝐒𝐢𝐧𝐠𝐚𝐩𝐨𝐫𝐞 𝐏𝐚𝐲𝐦𝐞𝐧𝐭 𝐒𝐲𝐬𝐭𝐞𝐦 𝐂𝐇𝐀𝐏𝐓𝐄𝐑 𝟖 - 𝐒𝐢𝐧𝐠𝐚𝐩𝐨𝐫𝐞 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐋𝐚𝐧𝐝𝐬𝐜𝐚𝐩𝐞 𝐑𝐞𝐟𝐞𝐫 𝐚𝐭𝐭𝐚𝐜𝐡𝐞𝐝 𝐃𝐢𝐚𝐠𝐫𝐚𝐦 𝐏𝐚𝐲𝐦𝐞𝐧𝐭 𝐒𝐲𝐬𝐭𝐞𝐦𝐬 : MEPS+ Interbank Funds Transfer (MEPS+ IFT) - MAS-operated real-time gross settlement system for large-value SGD interbank funds transfers and scripless Singapore Government Securities (SGS) and MAS Bills. MEPS+ is also used for settlement of obligations arising from financial market transactions, such as foreign exchange trades and the cash-leg of securities trades by members of other FMIs. MEPS+ IFT also settles the participants’ net obligations arising from the clearing of SGD checks, Inter-Bank GIRO transactions and FAST transactions in the Singapore Automated Clearing House (SACH). SACH prepares the net settlement files and sends them to MEPS+ IFT for settlement via a leased line linkage between SACH and MEPS+ IFT, at stipulated times within the MEPS+ operating hours. Fast and Secure Transfers (FAST). Retail payment system that provides electronic funds transfer service for customers of the participating banks to make SGD funds transfer 24 x 7 almost instantly. The system is operated by the Banking Computer Services Pte Ltd (BCS), and settlement takes place on MEPS+. Singapore Dollar Cheque Clearing System (SGDCCS). Retail payment system that clears SGD-denominated checks drawn on banks in Singapore. The system is operated by the BCS, and settlement takes place on MEPS+. US Dollar Cheque Clearing System (USDCCS). Retail payment system that clears US dollar-denominated checks drawn on banks in Singapore. The system is operated by the BCS, and settlement takes place at an appointed settlement bank. Interbank GIRO System (IBG). Retail payment system catering mainly for low-value payments. It allows customers of participating banks to transfer funds via credit transfers and direct debits to and from the accounts of customers of any other participating banks. The system is operated by the BCS, and settlement takes place on MEPS+. NETS Electronic Fund Transfers at Point of Sale (NETS EFTPOS). Debit card system operated by the Network for Electronic Transfers (Singapore) Pte Ltd. Settlement takes place at an appointed settlement bank. Continuous Linked Settlement (CLS). Cross-border payment system that settles foreign exchange transactions for the major currencies, including the SGD, on a payment-vs-payment (PVP) basis. Settlement takes place on the books of CLS. Funding of individual currencies take place in the real time gross settlement (RTGS) system of each jurisdiction. Source : IMF

CHIPS in the USA The Clearing House Interbank Payments System (CHIPS) is a private-sector electronic payments platform in the United States. Operated by The Clearing House Payments Company, it is one of the most critical payment systems for facilitating large-value interbank transactions. CHIPS is known for its efficiency, reliability, and cost-effectiveness in settling domestic and international dollar transactions. Key Features of CHIPS: 1. Large-Value Transactions: CHIPS primarily handles high-value payments for financial institutions, supporting the settlement of global trade and interbank lending. 2. Real-Time Final Settlement: It offers near real-time settlement finality, making it a preferred system for time-critical transactions. 3. Netting Process: CHIPS uses a netting mechanism to reduce the total amount of funds that need to be transferred, optimizing liquidity management for its participants. 4. Global Reach: As a U.S. dollar-denominated payments system, CHIPS is widely used by financial institutions worldwide to settle cross-border transactions. 5. Participants: CHIPS is used by major banks and financial institutions, including domestic U.S. banks and international banks with operations in the U.S. Importance of CHIPS: It plays a crucial role in the smooth functioning of the U.S. financial system by ensuring the efficient settlement of large-dollar transactions. CHIPS supports the U.S. dollar's position as the global reserve currency by facilitating international trade and finance. It complements the Federal Reserve's payment systems like Fedwire, providing redundancy and resilience in the U.S. payment infrastructure. CHIPS and the CHIPS Act: While "CHIPS" in the context of payment systems is distinct, it is worth noting that the U.S. CHIPS Act (Creating Helpful Incentives to Produce Semiconductors) relates to boosting semiconductor manufacturing and innovation in the U.S. These two "CHIPS" serve very different but equally vital roles in the economy. In conclusion, CHIPS is an indispensable part of the U.S. financial ecosystem, ensuring the secure and efficient transfer of funds across financial institutions globally.

Modern methods available for international fund transfers compared to the traditional SWIFT MT103 messages: 1. Blockchain technology: Blockchain-Offer faster and more cost-effective cross-border payments compared to SWIFT. These systems enable real-time settlement and greater transparency in transactions, reducing the need for intermediaries and potentially lowering costs. 2. Payment Service Providers (PSPs): Many fintech companies and digital payment providers offer alternative international transfer services/platforms that are often faster and more user-friendly than SWIFT. These providers leverage digital technology and mobile apps to streamline the transfer process and provide competitive exchange rates. 3. Peer-to-peer (P2P) transfers: P2P transfers are often faster and may have lower fees compared to SWIFT transactions, but they may have limitations on transaction amounts and recipient locations. Benefits of modern methods- - Faster processing times - Lower costs - Improved transparency Challenges of modern methods- - Adoption and interoperability - Security concerns - Regulatory compliance Ultimately, the choice of which method to use for international fund transfers will depend on factors such as cost, speed, convenience, security, and regulatory considerations. It's important for businesses and individuals to carefully evaluate their options and choose the most suitable method for their specific needs. #geethpeiris

ACH (Automated Clearing House) and wire transfer are both payment methods used to transfer funds between banks, but they differ in their processing times, fees, and use cases: ACH: - Slower processing time (batch processing, typically 1-3 business days) - Lower fees (usually $0.20-$1.50 per transaction) - Used for: - Direct deposit payroll - Bill payments - Recurring payments - E-checks - Limited to domestic transactions (within the US) Wire Transfer: - Faster processing time (real-time or same-day processing) - Higher fees (typically $10-$30 per transaction) - Used for: - Urgent or time-sensitive transactions - Large or international transactions - Business-to-business payments - Cross-border transactions - Can be used for both domestic and international transactions Key differences: - Speed: Wire transfers are faster, while ACH is slower. - Cost: ACH is generally cheaper, while wire transfers are more expensive. - Use case: ACH is suitable for routine, domestic transactions, while wire transfers are better for urgent or international transactions. When deciding between ACH and wire transfer, consider the transaction's urgency, size, and destination to choose the most appropriate method.