Emerging Technologies and Payment Systems
What this domain tests
Payment system mechanics and newer technologies: RTGS, NEFT, IMPS, UPI, NACH, CTS, cards, PPIs, CBDC, tokenisation, DLT, AI and cloud. Expect flow, settlement, risk and regulatory questions.
Core rules
- RTGS is real-time gross settlement for high-value payments (minimum ₹2 lakh, no upper limit), settled transaction by transaction; NEFT is a net deferred system operating 24x7 in half-hourly batches; IMPS is immediate retail interbank transfer available 24x7; UPI is an overlay on IMPS/other rails using virtual payment addresses.
- Clearing vs settlement: clearing determines obligations; settlement discharges them through RBI accounts. Card transactions use ISO 8583 authorisation and clearing files; CTS uses cheque images and truncation.
- Tokenisation replaces card data with a token for merchants; it reduces storage risk but does not remove authentication needs.
- CBDC (e-rupee) is central bank digital currency; retail and wholesale pilots exist. DLT can support reconciliation and trade finance but raises governance, scalability and privacy issues.
- Emerging technology adoption needs model risk management for AI, cloud concentration assessment and payment system oversight.
Worked example
A customer sends ₹50,000 via UPI. The PSP debits the customer, sends a request through the UPI switch to the remitter and beneficiary banks, and returns a response; interbank settlement happens separately through the clearing corporation/RBI. If the beneficiary bank times out, the remitter bank must auto-reverse or hold the funds per the dispute rules; the correct answer is not to ask the customer to contact the beneficiary bank first. Reconciliation of the switch file, bank posting and settlement is what detects a stuck transaction.
Traps that cost marks
- Confusing RTGS with NEFT or IMPS.
- Assuming UPI is a settlement system rather than an overlay.
- Treating tokenisation as a substitute for fraud monitoring.