Learning Objectives:

  • Identify and explain key digital payment systems.

  • Understand the architecture of Unified Payments Interface (UPI).

  • Describe digital payment security measures.

3.1 Overview of Payment Systems
Digital payment systems are the backbone of digital banking . Key systems include:

  • NEFT (National Electronic Funds Transfer): A nationwide system for one-to-one funds transfer, processed in batches .

  • RTGS (Real-Time Gross Settlement): A system for high-value transactions settled individually in real time .

  • IMPS (Immediate Payment Service): An instant, 24/7 interbank electronic funds transfer service .

  • UPI (Unified Payments Interface): A real-time payment system that enables instant fund transfers between bank accounts through mobile phones. UPI architecture includes:

    • Bharat QR: A QR code standard for merchant payments.

    • UPI QR: Quick-response codes for initiating UPI payments .

  • Prepaid Payment Instruments (PPIs): Digital wallets, cards, and FASTags . PPIs are regulated instruments used for making payments and can be reloadable or non-reloadable .

3.2 Digital Payment Security
Security measures in digital payments include:

  • Tokenisation: Replacing card numbers with unique tokens for transactions .

  • 3-D Secure (3DS): An authentication protocol for card-not-present transactions .

  • OTP (One-Time Password): A dynamically generated password for transaction verification .

  • Transaction Monitoring: Real-time alerts and velocity limits to prevent fraud 

 
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