Payment Systems

Banking and Financial Services

Course Overview

Payment systems have gone through a sea-change over the last four decades. From being a purely paper-based function, this area has undergone a transformation; various factors like technology, change in geo-political structure and globalisation are instrumental for this. 
This course covers the vast array of payment instruments (both paper-based and electronic) as well as the mechanisms of clearing and settlement. The learner is introduced to not only the widely accepted clearing mechanisms like National Electronic Funds Tranfer (NEFT) and Real Time Gross Settlement (RTGS), but also the highly evolved models such as Target2 and Faster Payment Service (FPS). Elements of international payments and the various media for making cross-border payments are also covered. 
The legal structure and the capability of a nation to usher change are an important factor for payment system evolution. We also cover the legal structure and aspects associated with Payment Systems.

Course Objectives

  • The National Payments System Law
  • The Central Bank Law
  • Banking Law
  • Commercial legislation related to the National Payments System participants
  • Additional legislation governing the conduct and activities of banks
  • Rules including inter alia: Payments Association and Automated Clearing House Rules
  • Central Bank Directives, Circulars and Guidance Notes
  • Bank for International Settlements publications including Guiding Principles for Payments System Modernization and Core Principles for Systemically Important Payments Systems
  • International Best Practice

Course Outline

Evolution of Payment System

  • Payment: Definition
  • Entities Involved
  • Payment and Settlement System in the early stages
  • Major Milestones in the development of Payment System

Clearing & Settlement Mechanism

  • Explaining the flow of the cheque
    • Duration
    • Accounts
    • Funds
  • Net Settlement
  • Gross Settlement
  • Card Processors
    • Card Settlement Process
    • ATM Operations
    • Point of Sale
    • EMV

Understanding Payment Instruments

  • Paper Instruments
    • Cheques
    • Demand Drafts
    • Cashier Orders
    • Payable at Par Cheques
    • Dividend Warrants
    • Interest Warrants
  • The concept of Clearing
    • MICR Clearing
    • At Par Clearing
    • National Clearing
    • Non-MICR Clearing
    • Direct Clearing
    • Returned Instruments
  • Electronic Instruments
    • Concept of value limits in clearing
    • Low value
      • ECS Credit
      • ECS Debits and Bill Pay (Future Dated
      • Payments)
      • NEFT
    • High Value
      • RTGS
  • Cards
    • Debit CardsCredit Cards
    • White label Cards
    • Store Value Cards

Understanding the Cheque instrument

  • Crossings
  • Stale and other nuances of cheque usage
  • Errors in writing cheques
  • Regulatory aspects of cheque processing
  • Analytics of cheque usage (India and the world)

International Payments

  • Remittances
  • Travelers Cheques
  • Foreign Currency Drafts and Cheques
  • Nostro and Vostro accounts
  • SWIFT
    • Basic introduction
    • MT103
    • MT202
    • MT101 RFT
    • MT940

Legal Framework

  • Negotiable Instruments Act
  • Payment and Settlement Act 2007
  • Payment and Settlement System Regulation 2008
  • Anti-Money Laundering
  • CPSS, Governance standards
  • Other Institutional Framework for establishing a
  • payment system
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Course Features
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  • 8 Weeks Online
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