Reference Guide for On-boarding ‘RuPay Kisan Card’ and ‘RuPay Debit Card’

GIZ – NABARD Rural Financial Institutions Programme

in Cooperation with NPCI

DEBIT

ImprintPublished by:Deutsche Gesellschaft für InternationaleZusammenarbeit (GIZ) GmbH

GIZ NABARD Rural Financial Institutions Programme

Contact:Dr. Detlev Holloh, Programme DirectorDeutsche Gesellschaft fürInternationale Zusammenarbeit(GIZ) GmbH

L-20, Green Park (Main)New Delhi 110 016 / INDIA

Phone: +91-11-2652 6024Telefax: +91-11-2652 8612Email: detlev.holloh@giz.deHomepage: www.giz.de

Responsible:Amit Aroraamit.arora@giz.de

Author:Sunil Aggarwal

Editor:Nitin Jindal

Design/Layout: artworkstudiosk39@gmail.com

Second EditionNew Delhi, October, 2013

DISCLAIMERSince the guide addresses all SCBs and DCCBs in India, it is possible that the requirements of some banks do not fit into the defined processes. The contents are indicative and supporting in nature. Also the cost heads mentioned in this document are indicative in nature. While every care has been taken to ensure accuracy, banks are advised to exercise their own due diligence and treat this guide only as an additional point of reference.

Reference Guide for On-boarding ‘RuPay Kisan Card’ and ‘RuPay Debit Card’

GIZ – NABARD Rural Financial Institutions Programme

in Cooperation with NPCI

iii

Preface

Definition of Payment System

Payment System is a unique and critical part of banking activities. This has been regulated under the Banking Regulations Act 1949 and the RBI Act 1934. The advent of electronic payment system resulted in the paradigm shift in the way the banking is done. It has given birth of ‘Anywhere Anytime’ Banking and a host of new products, services and conveniences like paperless, cash less payments. It also resulted in need to expand the scope of regulations to include electronic payment systems. Accordingly, in 2007, an Act was passed, namely the Payment and Settlement Systems Act, 2007 (PSS Act) and the governing regulations were enacted vide Payment and Settlement System Regulations, 2008. PSS Act defines the payment system as a system that enables payment to be effected between a payer and a beneficiary, involving clearing, payment or settlement service or all of them, but does not include a stock exchange or clearing corporations set up under stock exchanges. To decide whether a particular entity operates the payment system, it must perform either the clearing or settlement or payment function or all of them.Under the PSS Act, RBI is the designated Authority for regulation and supervision of the Payment Systems and for matters connected therewith or incidental thereto. In terms of the provisions of the Act, no person other than the RBI can commence or operate a payment system in India unless authorized by the RBI. The RBI is empowered for authorizing, prescribing policies and setting standards for regulating and supervising the payment and settlement systems in the country. Any unauthorized operation of a payment system would be an offence under the PSS Act and accordingly liable for penal action under that Act.Further, the system provider is required to operate the payment system in accordance with the provisions of the Act and the Regulations,

the contract governing the relationship among the system participants, the rules and regulations which deal with the operation of the payment system, the terms and conditions of authorization and the directions given by the RBI from time to time. RBI is authorized to issue directions to a payment system or system participant to cease or desist from engaging in any act, omission or course of conduct or direct it to perform any acts as well as issue general directions in the interests of the smooth operation of the payment system. RBI is empowered to revoke the authorization granted by it, if the system provider contravenes any provisions of the Act or Regulations, fails to comply with its orders/ directions or violates the terms and conditions under which the authorization was granted to it.RBI has since authorized several payment system operators of pre-paid payment instruments, card schemes, cross-border in-bound money transfers, ATM networks and centralized clearing arrangements. RBI is empowered to prescribe the format of payment instructions, size and shape of instructions, timings to be maintained by payment systems, manner of funds transfer criteria for membership including continuation, termination and rejection of membership, terms and conditions for participation in the payment system etc.For operating various Retail Payment Systems in India, an umbrella organization has been setup, namely National Payments Corporation of India (NPCI).

Current Payment Systems

The Payment Systems currently in use include clearing of cheques/demand drafts/pay orders, money transfers through ECS/NEFT/RTGS, card operations (Debit/Credit/Pre-paid) through ATM/POS/Internet, Mobile Banking, Internet Banking etc., described briefly below:

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1. Paper Based Clearing – Cheque/DD/ PO etc

• Payment System operated by RBI/ designated banks at different locations

• Membership - Direct/Through Sponsor Bank • Types of Clearing –Non MICR Clearing/MICR

Clearing/CTS (Cheque Truncation System)

2. Electronic Clearing Service (ECS)

ECS is an electronic mode of payment / receipt for bulk transactions that are repetitive and periodic in nature. Once the customer subscribes to the facility by giving a mandate (authorization), the funds are transferred on the due date from/into the bank account electronically. ECS is of 2 types – ECS Credit and ECS Debit, briefly described below:

a. ECS Credit–For affording credit to a large number of beneficiaries (like distribution of dividend, interest, salary, pension, etc.,) having accounts with bank branches at various locations within the jurisdiction of an ECS Centre by raising a single debit to the bank account of the user institution.

b. ECS Debit –For raising debits to a large number of accounts (like payment of telephone/electricity/water bills, cess/tax collections, loan instalment repayments, periodic investments in mutual funds, insurance premium etc.) maintained with bank branches at various locations within the jurisdiction of an ECS Centre for single credit to the bank account of the user institution.

ECS Centres

i) Local ECS• Operating at 81 centres / locations across

the country. At each of these ECS centres, the branch coverage is restricted to the geographical coverage of the clearing house, generally covering one city and/or satellite towns and suburbs adjoining the city

• Operated by: RBI/ Designated Banks at different locations

• Pre-requisite: Clearing Membership at the location

ii) Regional ECS (RECS)• Operating at 9 centres/locations across the

country. RECS facilitates the coverage all core-banking-enabled branches in a State or group of States and can be used by institutions desirous of reaching beneficiaries within the state/group of states

• Confined to the bank branches within the jurisdiction of a Regional office of RBI

• Pre-requisite: Clearing Membership at the location and CBS

iii) National Electronic Clearing Service (NECS)• The centralized version of ECS Credit, being

operated at Mumbai and facilitates the coverage of all core-banking enabled branches located anywhere in the country

• Operated by: National Clearing Cell (NCC) RBI, Mumbai

• Pre-requisite: Clearing Membership at Mumbai and CBS

3. NEFT and RTGS

• One-to-one Inter-bank funds transfer for individuals /corporate

• Real Time Gross Settlement (RTGS) – Online transfer during business time. Minimum amount Rs.2 lac. Each transaction payment is settled between remitting and recipient banks independently at the time of remittance

• National Electronic Funds Transfer (NEFT) – Remittance in hourly batches during business hours. No minimum and maximum amount limit. Inter-bank settlements at hourly intervals

• RTGS System is also used by banks for their inter-bank settlements for various types of transactions, like:a) Remittances b) Purchase of government securities (through

Clearing Corporation of India Ltd.)c) ATM/Micro-ATM/PoS Transactions

(through National Payment Corporation of India Ltd.), • The System is operated by the National

Clearing Cell, RBI, Nariman Point, Mumbai • Banks have to fulfill terms and conditions

prescribed by RBI to become member of the System. Those unable to meet the conditions can become sub-member through sponsorship by an existing member.

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4. Card Based Payment System –Credit/Debit/Pre-Paid

• Card Payment Network operated by NPCI/Visa/Master Card

• Pre-requisite: Membership – Direct/through Sponsor Bank and CBS

• The Cards enable the customers to effect payment through ATMs/Micro-ATMs/Point of Sales Terminals (PoS) and Internet

5. Internet Banking, Bills/Taxes Payment and E-Commerce

Customers can use Internet channel for payments. Banks provide access to account through Internet to their customers for transfer of funds in own account, remittance to others’ accounts, bills/taxes payments, payment for purchase of goods/services etc.

6. Mobile Payment System (Immediate Payment System)

• Only banks, licensed and supervised in India and having physical presence in India are permitted

to offer mobile banking after obtaining necessary permission from RBI

• Provided by: NPCI through its existing NFS switch• Pre-requisite – Bank should have mobile

banking licence from RBI, CBS and Mobile banking application.

Electronic Payment Systems have been adopted quickly by the commercial banks, which has brought unprecedented benefits to them. RRBs have also moved forward with the support of their sponsor banks. SCBs and DCCBs in India have also now embarked upon the mission of on-boarding the Core Banking Solution and Electronic Card Payment Systems. Some SCBs have taken the lead for themselves as well as for the DCCBs under their fold. Some DCCBs have moved forward of their own. This Reference Guide has been prepared with a view to support these banks in on-boarding Electronic Card Payment Systems. The reference points are intended to draw attention to key points which the banks should keep in mind while selecting Card Payment System and to improve understanding of the systems to avoid pitfalls and adopt processes which led to successful adoption of the system by members of the peer group.

Contents | vi

Table of Contents

Title Page

Introduction ......................................................................................................................... 1

‘RuPay Kisan Card’/ ‘RuPay Debit Card’- Procedure for On-boarding ................................. 3

1. Compliance with the Guidelines Issued by NPCI ............................................................. 5

2. Acquisition of Card Payment Switch (with Card Management System) ............................ 6

2.1 Option 1 - Acquisition of the Card Payment System on ‘Ownership Basis’ ................... 6

2.2 Option 2 - Acquisition of the Card Payment System on ‘ASP Model’ ............................ 7

2.3 NABARD’s Financial Support ....................................................................................... 8

3. Membership of National Financial Switch (NFS) .............................................................. 9

3.1 Direct Membership ........................................................................................................ 9

3.2 Sub Membership ............................................................................................................ 9

4. Printing of Cards, PINs and Welcome Kits ....................................................................... 12

4.1 Cost Components .......................................................................................................... 13

4.2 Procedure for Getting IIN from NPCI ........................................................................... 13

4.3 Standard Operating Procedure ....................................................................................... 14

4.4 NABARD’s Financial Support for Introduction of RuPay Kisan Card ............................ 14

5. Installation of PoS/MICRO-ATM ..................................................................................... 16

5.1 Key Features ................................................................................................................... 16

5.2 Key Components of PoS/Micro-ATM Facility ................................................................ 16

5.3 Acquisition of PoS/Micro-ATM Switch Module ............................................................. 17

5.4 Acquisition of PoS/Micro-ATMs .................................................................................... 18

5.5 NABARD’s Support for Installation of PoS/Micro-ATM ............................................... 18

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Title Page

6. Installation of ATM .......................................................................................................... 22

6.1 Acquisition of ATM Switch Module .................................................................................. 22

6.2 Acquisition of ATMs ......................................................................................................... 23

6.3 Prominent ATM Manufacturers and ASP Vendors for ATM ............................................... 24

6.4 NABARD’s Support for ATM ........................................................................................... 25

Annexure ‘A’-ATM Transaction Flow ..................................................................................... 26

Annexure ‘B’ - Vendors Approved by NPCI for Card Design & Manufacture ....................... 28

Annexure ‘C’ - Format for Submitting KCC Proposal - Cooperative Banks .......................... 30

Glossary ................................................................................................................................ 32

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Having migrated to CBS, the natural progression for the cooperative banks is to on-board electronic Card Payment System to be able to offer ‘Anywhere Anytime’ Banking Services to their customers and to provide short term credit facility to farmers through RuPay Kisan Card (KCC Card). It would help the farmers to get banking facilities at their door step on a 24 x 7 basis across all locations through ATMs/PoS/Micro-ATMs (‘alternate channels’).The salient features of the Card Payment System are:• These ‘alternate channels ‘of the bank are

connected to the bank’s CBS through

Introduction

the software solution called ‘Switch’. The transactions on bank’s own ‘alternate channels’ are routed through the Switch to the bank’s CBS. To facilitate transactions of cards issued by other banks, the Switch should be connected to NFS so that such transactions are transmitted to respective bank’s Switch. Those other banks’ Switches should however be similarly connected to the NFS.

• To connect to the NFS, the banks have to secure membership of the same from NPCI. Banks can become direct member or can go through another existing member bank under the Sponsorship Scheme.

Photographs by Enrico Fabian

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• The international transactions through International Debit/Credit Cards are routed to the concerned Network Service Provider – Visa/MasterCard/American Express/Diners Card etc. NFS has recently entered into a strategic alliance with Discover Financial Services (DFS) to expand its reach to international transactions.

• These being card based channels, banks require a Card Management System (CMS) which contains the requisite information about the cards – account holder’s name, account number, card number generation & updation logic, password, PIN Management, hot listed cards, expired cards, biometric record etc. It validates the authenticity of the card before the transaction is transmitted to the CBS through the Switch for completing the transaction.

• It is not necessary for a bank to have ATM, PoS or Micro-ATM to introduce Card Based Electronic Payment System as the Card Holder is free to use the Card at these ‘alternate channels’ installed by other banks in the network. It would be however necessary for these banks to have EFT Switch with the CMS Solution. As and when the bank intends to install its own ATM and/or PoS/Micro-ATM, it has to add ATM and/or PoS/Micro-ATM module(s) to the Switch. In all there would be 5 modules in the Card Payment Switch – Switching system, Card Management System, ATM Module, the PoS/Micro-ATM Module and the Host Security Module (HSM).

• The validation of a card initiated transaction is through–

• Card and PIN in case of ATM• Card, PIN and/ or Signature in case of PoS• Card and Biometric Identification in case of

Micro-ATM• The Card related transaction on Internet

Banking is routed through Internet Module of CBS to the Card Payment Switch for validation of the Card related information; and thereafter it is relayed to the CBS.

• The Switch for Mobile Banking is independent of the ATM and POS/Micro-ATM Switches, having its own logic, processing and operating system.

• The Cards are linked in the CBS to the respective KYC Compliant Accounts

• The banks are required to print cards, PIN mailers and Welcome Kit etc. Most of the banks find it beneficial to outsource these activities to approved vendors.

• To facilitate inter-bank transactions within the country relating to ATM, PoS, Micro-ATM and Mobile Banking, National Financial Switch (NFS) has been setup by NPCI. To be a part of the inter-bank payment through these channels, it is necessary that banks become member of NFS and arrange connectivity of their Switches to NFS. For international card transactions, currently Visa and MasterCard services are being availed. NPCI also has started issuing International Chip Cards recently in association with Discover Financial Services.

• Annexure ‘A’ contains the Transaction Flow of ATM/PoS/Micro ATM transactions.

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The RuPay Kisan Card and RuPay Debit Card are plastic cards issued by banks to the farmers and other customers to extend the facility of ‘Anywhere Anytime Banking’. The Card Holder is able to use the Card at any ATM, PoS, and Micro-ATM or through Internet (‘alternate chan-nels’ / ‘delivery channels’) to con- duct financial and non-financial transactions. All transactions done at the above delivery channels of the Card Issuer Bank are routed through the switch to the CBS of the bank. The transactions done at the alternate delivery channels of other banks are

‘RuPay Kisan Card’/ ‘RuPay Debit Card’ - Procedure for On-boarding

routed through the multi- lateral network created by NFS to reach the Issuer bank’s switch /CBS.To enable the aforesaid, the bank is required to take multiple steps which are briefly described in table below. The activities to be undertaken under each step can be broadly divided into following six seg-ments:1. Compliance with the Guidelines issued by

NPCI 2. Acquisition of Card Payment Switch (with the

Card Management System)

Steps for on-boarding the Card Payment System

1 Acquisition of Switch and Card Management System OREngaging an ASP Vendor for providing Switch and Card Management Services. (NPCI has displayed list of Vendors having required certification. Other Vendors will require prior NPCI certification)

2 Bank to obtain Membership of NFS from NPCI after complying with specified terms and conditions OR

3. Banks to become Sub Member through Sponsorship by an existing Member bank (For easier connectivity, the Banks may keep in mind the Switch taken by the Sponsor Bank while selecting Switch Vendor/ASP)

4 Linking ASP Vendor’s Switch with Switches of DCCB

5 Internal certification with identified ASP and Bank’s CBS for conforming readiness to NPCI for certification

6 Selection of Card Vendor (certified by NPCI)

7 Submission of application to NPCI for IIN assignment

8 Submission of Documents to NPCI for Risk Assessment & Compliance evaluation

9 Finalization of Card Design as per NPCI card specifications

10 Submission of card design for approval from NPCI

11 Submission of embosser file with CVD values and track 1 & 2 data to NPCI for validation

12 Placing order with Card Vendor for printing of test cards

13 Submission of 30 test card plastics, card details & Requirements template to NPCI

14 Carrying out the Host to Host Testing & Certification round as per RuPay Specs and NPCI specified TAT.

15 Bank and NPCI to sign off successful testing on the UAT scripts

16 Pilot Go Live with 4 to 5 identified Members

17 Reconciliation & accounting conformation from the bank on pilot go live process

18 Full go Live

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3. Printing of Cards, PIN mailers and Welcome Kits

4. Membership of National Financial Switch (NFS)

5. Installation of PoS/Micro-ATM6. Installation of ATMThe key points relating to each of the segment have been described below with the aim to help the banks in selection of the appropriate solution, hardware and the vendor, evaluation of costs, fol-lowing the process for joining the payment sys-tem, commissioning of the solution, ensuring the security, managing technology upgrades and growth etc. It may be noted here that the mandatory activities for on-boarding the Card Payment System are (1) Membership of NFS (2) Acquiring Payment

Switch and (3) Printing of Cards/Pin. (4) PCI & other certifications done by ASP.It is not necessary to install PoS/Micro- ATM/ATM. However, the Card Issuing Bank has to pay Inter-change Fee to the Bank which owns the ATM/Micro-ATM on which the Card is used. In case of use at PoS, the Card Issuing Bank is enti-tled to receive a part of the commission received by the bank owning the PoS. The rates of pay-able fee and receivable commission are advised by NPCI. Banks generally prefer to install their own ATM/Micro-ATMs at locations having large us-age of the Cards issued by them.Banks are advised to exercise due diligence and consider these guidelines only as a support in their endeavour.

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Following are the key steps required to be taken by banks for on-boarding the RuPay Card Pay-ment System:a. Obtain Board approval for Direct/Indirect

membership of the Payment System.b. Submit application to NPCI alongwith the

board approval, copy of RBI License, bal-ance sheet and other documents prescribed by NPCI, for obtaining Institution Identification Number (IIN).

c. Tie-up with a Sponsor Bank in case of Indirect Membership and submit the IIN application to NPCI, with the Sponsorship letter from the Sponsor Bank.

d. Alongside, the bank to proceed with the selec- tion of the card vendor from the approved list of NPCI. The technical specifications of the Card are to be as per NPCI defined standards

1. Compliance with the Guidelines Issued by NPCI

e. Allotment of IIN for RuPay Debit and RuPay Kisan Card by NPCI

f. Sharing of card design files and RuPay card specification by NPCI

g. Sharing of sample embosser file and test cases by the Bank to NPCI

h. On successful testing, bank would be ready to go live directly / under sub-membership of Sponsor Bank

Banks are advised to visit website of NPCI (www.npci.org.in) for detailed guidelines in the matter.Besides, NABARD has published ‘A Compre-hensive Handbook on Card Terminology, FAQs and NABARD Guidelines for providing card enabled ser- vices by Regional Rural Banks and Cooperative Banks’. It is hosted on the web site of NABARD. The banks will find the handbook extremely helpful in implementing the Card Pay-ment System.

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Banks can acquire Card Payment Switch on “Owner- ship” basis as well as under ASP Model. Major contributing factors for selection of the Option are outlined below:

a. Estimated No. of Cards/No. of Transactions– If the number of cards is low, it is cost effec-tive to outsource this activity to ASP rather than managing the entire Payment System which will have a certain minimum cost of maintenance

b. Cost of Acquisition of the Card Payment Switch – The cost of acquiring Payment Sys-tem has a certain minimum cost. If the volume of transactions is not likely to be high in the medium term, it may be worthwhile to opt for ASP Model. The cost benefit needs to be as-sessed appropriately. Over the period of time, it is also likely that the technology and/or me-dium undergo changes which may call for ad-ditional expenses. That can be avoided in ASP Model

c. Plans to offer sponsorship to other banks–In case a bank intends to be the sponsor for other banks, it may be advantageous to select “own-ership basis”

d. Availability of IT Resources – The availability of IT resources in the bank to manage the Pay-ment System is a key factor for taking decision in favour of “ownership basis”

e. Financial Resources – The upfront cost of ac-quiring Payment System is required to be seen in the backdrop of financial strength of the bank

f. Available Roll-out time – The ‘ownership basis’ model would require time to setup the Payment System. In view of most of the banks running behind projected time-lines, ASP Model would be better suited. The readiness of the technol-ogy base would be a key factor

2. Acquisition of Card Payment Switch (with Card Management System)

2.1 Option 1 - Acquisition of the Card Payment System on ‘Ownership Basis’

If the bank intends to offer sponsorship to other banks or expects large volumes and has sufficient IT resources, the ownership model may be better suited.

2.1.1 Selection of Software Solution

Following key points are to be given due consid-eration:a) Certification by NPCIb) Adherence of the Switch to all the Technical

norms & security guidelines as per RBI & NPCI requirements

c) Licensing Terms -i) Limitation on the Number of Transac-

tions/Cards/Channels/Devices – present or future

ii) Right of use by Associates/BCs/Agencies/Subsidiaries

d) Price Points i) Inclusions: Application Software, System

Software, Connectivity with Host & NFS, Project Implementation, Training/Support

ii) One time Licence Fee and recurring fee etc.iii) Exclusions: Hardware, third party software etc.iv) Customization cost

e) Integration with the CBS/Implementation Turn Around Time

f ) Customization requirements and time linesg) Availability of regulatory and normal reportsh) Support for additional/future MIS require-

ments i) Training to Implementation Team& other staff,

support methodology j) Performance Warranties, Quality Assurance,

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Certifying Authority, Date, Validity etc.k) Problem/Critical Support Management Sys-

tem and Turn Around Timel) Terms of Annual Maintenance/Technical Sup-

port, Period of validity of ratesm) Future Versions upgrade, release terms, fre-

quency, management of existing Versionn) Solvency of the Vendor for sustained support

in the medium/long termo) Reference Check with an existing client –

onsite visitp) Security from external threats - hacking/in-

terventionq) Hardware requirement and other dependen-

ciesr) Turnkey options – Software/Hardware/Com-

missioning and initial hand-holding

2.1.2 Selection of Hardware

a) Technical specifications as per Software Solu-tion

b) Sizing of Capacity to take care of at least me-dium term requirements

c) Delivery Period, dependenciesd) Complaint Management System – Methodol-

ogy for resolution of problems, Turn Around Time, Critical Support Management System

e) Annual Maintenance Contract/Annual Tech-nical Support Terms

f ) Reference Check with any existing client – onsite visit

g) Solvency

2.2 Option 2 - Acquisition of the Card Payment System on ‘ASP Model’

The Model relieves the bank from the efforts in-volved in setting up their own Switch. The ASP Vendor owns the Switch and undertakes the entire operating activity at its own location on a shared basis, providing the service to many banks. It has the connectivity with the NFS already in place, if its duly certified by the NPCI. The ASP Vendor also possesses the DR site for the Switch. Only connectivity with the CBS of the client bank is required which significantly cuts down the time and costs.

This Model is considered a value proposition for the DCCBs in the background of limited volume and IT resources, need for quick turn-around-time and savings of capital costs.

2.2.1 Selection of Vendor

The Switch of the ASP Vendor needs to be certi-fied by NPCI. The certification process followed by NPCI ensures that the ASP Vendor has requi-site wherewithal to undertake the activity on the sustainable basis, ensuring security and safety.ASPs compliant of laid down specifications need certification by NPCI to be able to offer services to the Banks. At present following nine (9) ASPs are providing services to the bank as per norms specified NPCI. The list is subject to revision from time to time and therefore banks are advised to get in touch with NPCI for updated status at the time of selection of the Vendor:

1. FIS Solutions2. C-edge3. Euronet Services4. Sarvatra Technology5. Thane Janata Sahakari Bank6. Shyamrao Co-operative Bank (Maximus and

Narada Switch)7. Saraswat Co-operative Bank8. Finacus9. E-Cosmos Solutions (Cosmos Bank)

2.2.2 Banks need to look into the following matters, inter-alia:

a) Licensing Terms -i) Limitation on the Number of Transactions/

Cards/Channels/Devices – present or future ii) Right of use by Associates/BCs/Agencies/

Subsidiariesb) Price Points

i) Fixed Cost (one time – for Integration/Inter-facing with Bank and NPCI), Com-missioning

ii) Transaction (Switching) Fee - Financial Transactions/Non-financial Transactions

iii) Basis of Fee – Fixed or per Transaction, Flat Rate or Graded on the basis of Volume , all inclusive or any exclusion, any minimum per month criteria

iv) Project Implementation, Training/Support

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v) Exclusions: Hardware, third party software etc.

vi) Customization costc) Customization requirements and time linesd) Availability of regulatory and normal reportse) Support for additional/future MIS require-

ments f ) Turn Around Time g) Implementation time, training to Implemen-

tation Team and others, support methodology h) Hardware requirement and other dependen-

ciesi) Data Centre Integrity, Safety and Confidential-

ityj) DR site at a different seismic zone

k) Quality Assurance, Certifying Authority, Date, Validity etc.

l) Problem/Critical Support Management System and Turn Around Time

m) Warranties for Performance (uptime) and Data Security

n) Solvency of the Vendor - for long term suste-nance and support

o) Reference Check with an existing client – onsite visit

2.3 NABARD’s Financial Support

Cost of integration charges between POS and CBS server – On reimbursement basis.

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The bank should consider following points before deciding the mode of membership:a) Direct Membership may not be a cost

effective proposition if the volumes are not sufficient

b) Scope of sponsoring other banks – If the bank intends to be the sponsoring bank, direct membership is suitable in line with the Bank’s technical & operational capabilities. Otherwise, it may be better to opt for sponsorship model

c) Sponsorship model can prove to be quite a value proposition if the tie-up terms are well negotiated. Following benefits can accrue:i) Migrating to Payment System would

be quick as technical issues relating to approval of the switch, establishment of link with NFS etc., would stand addressed. Only link with ASP’s switch would need to be established.

ii) Sponsoring bank’s ATM/ PoS network may be available for Card Holders without any interchange costs.

iii) Sub –Membership would overcome the requirement of two rounds of testing. Only one round of UAT would be required. No comfort Testing would be required as the ASP would already be certified.

3.1 Direct Membership

Bank fulfilling the following General and Technical Eligibility criteria can apply to NPCI for direct membership.

3.1.1 General Eligibility Criteria

a) Bank should have valid Banking License from RBI.

b) Bank should have Current A/c with RBI

3. Membership of National Financial Switch (NFS)

c) Bank should be on CBS for all its Branches, RO, HO and extension counters.

d) Bank should be a direct RTGS Member of RBIe) Bank should have HSM and Card Management

System* f ) Should have ATMs and the ATM Switch

networked with the NFS*g) Should have EFT Switch* as per NPCI’s

technical criteria & adhering to security guidelines of RBI

h) Should have DR&PR site for Data Centre* and Switch

i) Bank to own responsibility to carry out – • Clearing & Settlements• Daily 3-way Reconciliation• Dispute Management • Fraud and Risk Management

*Own or Sharing Basis

3.1.2 Technical Eligibility Criteria

a) Use of HSM (External Host Security Module) for encryption and decryption

b) FIPS 140-1/140-2 or FIPS 197 certified crypto product (HSM Standard)

c) Pin Generation and verification using HSMd) ATMs and POS should have unique Key per

terminale) Use of Double length Triple Des keys for

terminals and translationsf ) Mandatory PIN, CVV1 and expiry date

verification by issuersg) PCI DSS compliance for Switch PR & DR

3.2 Sub-Membership

3.2.1 Salient Features:

a) Since most of the DCCBs are not member of

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RTGS, they tie up with the Direct Member Bank of the NFS.

b) Under the terms of agreement the Sponsor Bank assumes the role of the Settlement Banker / “Sponsor Bank” for these DCCBs.

c) The DCCB has to open a current account with the sponsor bank and keep it funded as per mutual arrangement for settlement.

d) The Bank’s customer will have cards having a unique IIN issued by NPCI for RuPay Debit Cards.

e) The Banks would have tie-ups with various ASP/TSPs who automate their inter-branch network, establish ATMs & issue ATM cards.

f ) Since considerable investment and expertise is required to setup Payment Switch, smaller banks normally use the services of ASP for Payment Switch on sharing basis.

g) ASP usually has a switch-to-switch tie-up between the NFS switch and its Switch through which multiple co-op banks’ CBS are connected. The bank would therefore be required to only arrange connectivity between its CBS and the Switch of ASP.

h) Sub-Member can act both as Issuer and Acquirer also

i) As a sub member the Bank incurs the costs towards –i) Switch sharing with the ASP/Sponsor Bankii) Card production, personalization and

issuanceiii) Rs. 0. 50 per transaction as switching

charges to NPCI for ‘Off-us’ transactionsiv) Interchange @ Rs. 15/- + Service Tax for

Financial Transaction and Rs.5/- + Service Tax for Non-Financial Transactions to Acquirer Banks for ‘Off-us’ transactions

3.2.2 General Eligibility Criteria

a) CBS Implementation b) Sub membership through sponsorship by an

existing NFS Direct Member Bankc) EFT Switch – Own or through ASPd) RTGS Member - Direct or through Sponsor

Banke) DR/PR site for Data Centre* – Own or

through ASP f ) To carry out Clearing & Settlements # g) Reconciliation& Dispute Management #

h) Fraud and Risk Management #

# Responsibilities can be shared with Sponsor Bank & ASP

3.2.3 Technical Eligibility Criteria – Own or through ASP

a) PIN generation & verification using HSMb) HSM for PIN encryption & decryptionc) Mandatory Pin, CVV1, Expiry date verification

by issuerd) Switch duly certified by the NPCIe) Debit Card Management Systemf) Switch to be PCI-DSS compliant

3.2.4 Documents to be submitted by the Bank to NPCI to initiate the on-boarding of the Bank as sub member

a) Sponsorship letter from the Sponsor bank introducing the Bank as sub member and the ASP.

b) Approach paper from Sponsor Bank (if new)c) Approach paper from ASP (if new)d) Board resolution from Sponsor Bank for

participation in the Sponsor Bank Model of NFS (if new)

e) Duly filled & attested Risk Checklist from the Bank

f ) A copy of RBI license issued to the Bankg) Duly filled and attested Network compliance

checklist from the Bankh) Audited balance sheet of the Bank for last 3 yearsi) A copy of CAMEL ratings of the Bankj) KYC & AML Compliance Undertakingk) Status Form of OC 47 - Disabling Cash

Retraction Facility in ATMs, if the Bank has deployed own ATMs

l) Network Diagram between sub-member Bank &the ASP

m) IIN Request form & Cover letter from Bankn) Application for joining NFS as sub-member

and annexure from Banko) Bank Information Sheet from the Bankp) Non-Disclosure Agreementq) Sub-membership Undertakingr) RuPay Membership Agreements) Tri-partite agreement to be executed between

Sponsor Bank, Sub-member & NPCI.

11

Differences in Direct membership and Sponsor Bank (Sub-member) Model

3.2.5 Standard Operating Procedure

a) The Sponsor Bank will handle the settlements on behalf of the sub-member bank and will indemnify settlements on the NFS network on behalf of its sub member bank. The Sponsor Bank and the sub member bank will have an internal settlement mechanism mutually decided by both entities.

b) DCCB will forward the customer complaint to the Sponsor Bank (who would already have a Dispute Management mechanism in place by virtue of being a part of the NFS network). The Sponsor Bank will raise the dispute in its DMS using its DMS ID assigned to the Sub-member. Complaint will be solved as per normal procedure &a solution will be provided to sponsor bank which in turn will provide the same to the DCCB

c) NPCI will settle all DCCB transactions with the Sponsor Bank as a part of the consolidated settlement of the sponsor bank. It will be the responsibility of the Sponsor Bank to settle the same with the DCCB.

d) Sponsor Bank would inform NPCI to maintain the limits into the Liquidity Manager and NPCI would do the same and confirm back to Sponsor Bank.

e) Limits with respect to the Sub-Member, as advised by the Sponsor Bank would be captured in the Liquidity Manager

f ) All transactions would be routed through Liquidity Manager first and only successful transactions would be sent to sub member through ASP

g) The Sponsor Bank will check its Issuer/Acquirer activity reports and other MIS received from NFS and settle its accounts accordingly with the DCCB at mutually decided intervals.

h) The Sponsor Bank will refer to the NFS generated Issuer Activity reports and other MIS to settle transactions under the specific DCCB IIN number i.e. for doing recon.

i) The Sponsor Bank will be responsible for DMS on behalf of the DCCBs.

j) Separate DMS report for net settlement and other reports would be generated for the Sponsor Bank in respect of the sub member

k) Separate DMS IDs would be created for Sponsor Bank to capture DMS related issues for the sub members

l) NPCI would tag sub member to its Sponsor Bank and the ASP

m) ASP should be certified by the 3rd Party SISA Certified Auditor

n) Technical Certification for NFS connectivity would be done by NPCI

DCCBs need to lay down detailed Procedure for operating under Direct/Sub Membership, liquidity management, reconciliation, dispute management etc.

Requirements Direct Members Sub Members

CBS implementation Yes Yes

EFT Switch Yes/ Can be on Share basis Yes/Can be thru Sponsor Bank

Connectivity to NPCI Yes/ Can be on Share basis No/ Can be thru ASP

RTGS member Yes No/ Can be thru Sponsor Bank

DR/PR site for data center Yes/ Can be on Share basis No/ Can be thru ASP

HSM for Pin encryption /Decryption Yes/ Can be on Share basis No/ Can be thru ASP

Debit Card Management System Yes/ Can be on Share basis No/ Can be thru ASP

Acquiring facility on your switch Yes/ Can be on Share basis No/ Can be thru ASP

To carry out Clearing & Settlements Banks Own responsibility Responsibilities Can be shared with Sponsor Bank& ASP

Recon & Dispute Management Banks Own responsibility Responsibilities Can be shared with Sponsor Bank & ASP

Fraud & Risk Management Banks Own responsibility Responsibilities Can be shared with Sponsor Bank & ASP

Contents | 12

Banks are required to print cards and PIN mailers for the Card. Following type of practices are followed by different banks in this regard:

a) RuPay Card Detailsa. The Card production and design vendor

need to be certified by NPCI b. Bank has to adopt the standardized card

design and specifications laid down by NPCI for the Kisan Cards

c. The cards must be able to perform successful transactions on all NFS ATMs under NFS

4. Printing of Cards, PINs and Welcome Kits

network operating rules and regulationsd. 30 test cards have to be sent for testinge. The test cards may or may not have the art

work; white plastic cards also can be sent. But the cards have to contain the dummy Primary Account Number and a PIN

f. Numbering Structure of the Card Numberi) Card number consists of 16 digits ii) First 6 digits are to identify Issuer

Identification Number (the Bank)iii) Last digit (16th) is the check sum digit

(system generated digit to verify account

13

number)iv) Digits number 7 to 15 (9 digits) are for use

by the Bank. Out of this, first 2 i.e. 7th and 8th

are for product differentiation. Remaining 7 digits can be used to identify the card holder.Separate IINs are issued for RuPay Kisan Card and Aadhaar based cards.

b) Issuance of Card/Welcome Kiti) INSTA CARDS - Some Banks offer Welcome

Kit to their customers, containing Card and the Welcome Letter. The PIN mailer is not separately delivered to the customer and is in the welcome kit itself. These Cards are not customized i.e. they are not pre-linked to an account and don’t carry customer’s name. The non-personalised Cards (Insta Cards), contained in the Welcome Kit are delivered to the branches who hand-over the same to Customers after duly linking the same to their Account.

ii) PERSONALIZED CARDS - Some banks opt for issuing personalized cards, carrying the name of the Card Holder. In this case PIN is delivered separately to the customer.

c) Delivery of Cards/PINs

ii) Many other banks opt for outsourcing the entire activity of printing the card & the PIN mailers as well as preparing the Welcome Kit.

e) Third Party Vendor SelectionThe Vendor needs to have requisite technical expertise, resources and credibility to undertake this very critical activity. The very basis of transaction being the Card and the PIN, the activity has to be carried out in high level of secured and confidential environment. NPCI has prepared a panel of approved card vendors. The List of such vendors approved by NPCI for card design & manufacture is given in Annexure ‘B’

4.1 Cost Components

There are several components of the cost in respect of preparation of Card/PIN mailer/ Welcome Kit, like:a) Integration, interfacing and host certification

- onetime costb) Card Designing - onetime cost c) First 100 Card printing – onetime costd) PIN Generation – per PINe) Printing of Card, Personalization, PIN mailer

printing, Welcome Kit, collation and courier

4.2 Procedure for getting IIN from NPCI

a) The Bank should apply for IIN in the prescribed IIN Request form provided by NPCI

b) The request form has to be duly signed by the designated authority of the DCCB, duly stamped with the seal and sent to NPCI along with a covering letter on the DCCB’s letterhead and a copy of the bank’s RBI license. The Sponsorship letter from the Sponsor bank should also be attached.

c) The IIN will be valid only for the product applied for and any other product variation(s) using the same IIN would require separate approvals

d) The Bank may request for a single IIN if it has the capability of product differentiation at 7th and 8th Digit of card number. However for RuPay Debit, RuPay Kisan Card and Aadhaar based cards, NPCI will issue separate IINs

e) NFS operating guidelines and all circulars

The process of delivery of the Card, PIN mailer and the Welcome Kit is also different in various banks. Some route everything from their Central Office. Many banks have an arrangement with the Vendor for supplying the Welcome Kit directly to the branches as per Indent sent to the Vendor. PIN mailers are sent separately in case of (personalized cards), usually by the bank, either through the branch or directly to the Card Holder.

d) Printing of Cardsi) Some banks print PIN mailers in-house.

Similarly, they compile the Welcome Kit also. Only Cards are procured from the Vendor.

Card Personalization Bureau

Contents | 14

issued under NFS will be applicable for the cards issued under the IIN

4.3 Standard Operating Procedure

a) There are several supporting activities which the banks are required to undertake to ensure smooth card operations like – i) Handling of Card/PIN mailer/ Welcome

Kit - Receipt and storage of Card/PIN/Welcome Kit, Distribution, Activation of cards and Operations

ii) Servicing of ATM – cash loading, collecting cheques/purged notices, reconciliation of machine cash etc.

iii) Hot-listing cards, issuing modified/duplicate Cards

iv) Reconciliationv) Complaint and Dispute Managementvi) MIS Formats

b) Banks should set-up a 24 X 7 Help Desk of its own or engage the services of third party service provider to take care of hot-listing of lost stolen cards and other urgent customer service related issues.

c) It is important that the banks lay down detailed Standard Operating Procedures to handle various operational activities such as –i) Processing of Application from the Account

Holder – at branch and Central Officeii) Generation of Card, PIN mailer and

Welcome Kitiii) Delivery of the Card/Welcome Kit at the

Branchiv) Handing over of the Card/Welcome Kit to

the Account Holderv) Delivery of PIN mailer to the Account

Holdervi) Hot-listing cards, issuing modified/

duplicate Cardsvii) Product-wise fee management viii) Card Accounts Managementix) Card Renewal & Re-Issuancex) PIN Re-issuance xi) Transaction charge managementxii) Fees to be levied on various products

during issuance, renewal, reissuance etc.xiii) Reconciliation between network

association files, CBS files and bank

switch files xiv) Generation and monitoring reports –

transaction, exception etc.

4.4 NABARD’s Financial Support for Introduction of RuPay Kisan Card

With the objective of enabling the clients of cooperatives to connect with national payment system and avail all types of banking facilities at their doorstep, NABARD has floated a scheme to provide financial support to cooperative banks.

4.4.1 Eligibility

a) All Cooperative banks which are fully CBS enabled.b) The bank has to ensure that certification

standards as specified by various agencies for RuPay cards are being adhered to.

4.4.2 Pattern of Assistance

a) Cost of printing and issuing RuPay Kisan Cards -i) Upto Rs. 25/- per card (should be owned

by the bank and conforming to the standards specified by NPCI). The card can be a non-personalised card, which can be given as a part of the “Welcome Kit” to the customer.

ii) The concerned Cooperative bank may work out a project report covering the total number of RuPay Kisan Cards required

iii) Release of Assistance - Release of the grant will be in tandem with achievement. i.e.

On coverage of 25% of the operational accounts

25% of the total eligible cost of the cards

On coverage of 50% of the operational accounts

50% of the total eligible cost of the cards

On coverage of 75% of the operational accounts

75% of the total eligible cost of the cards

On coverage of 100% of the operational accounts

100% of the total eligible cost of the cards

To get real benefit, banks must aim at achieving 100% coverage of the operational accounts.

15

4.4.3 Extent of support

a) 100% in North Eastern Region, Sikkim, Jammu & Kashmir, Uttarakhand, Jharkhand, Himachal Pradesh, Chhattisgarh and Andaman & Nicobar Islands

b) 90% in the rest of the country

4.4.4 Duration of Support

For a period of 3 years.

4.4.5 Operationalisation of Scheme

a) Banks to ensure the following before availing grant assistance from NABARD:i) Banks to sign General Agreement with

NABARD for availing grant assistance, the details of which can be availed from Regional Offices of NABARD.

ii) Banks to forward a copy of all the agreements signed by the bank with various vendors to NABARD Regional Offices

b) Upon stabilization of the system, the cooperative bank may forward a letter to

NABARD informing about number of RuPay Kisan Cards issued to its farming clientele. The concerned NABARD Regional Office will provide an approval for the same after verifying the claim. Later, on a quarterly basis, the cooperative bank may approach NABARD for reimbursement along with system generated information of the various expenditures.

c) It has been recommended by NABARD that cooperative banks adopt the ASP route for providing ATM services to their clients considering the huge capital expenditure involved in establishing and maintaining an ATM network.

d) Banks may apply to NABARD on prescribed Application Form - Annexure ‘C’

4.4.6

In addition, there are various capacity building schemes of NABARD under Financial Inclusion Fund (FIF) to help the banks in undertaking technology upgradation for their staff and clients. Banks may make use of the support available for the same.

Contents | 16

With the acquisition of Switch and Membership of NFS, the banks can launch the Cards, as ex-plained above. However, the card holders will be able to use these cards only at the ATMs and PoS/Micro-ATMs of other banks if the Issuer Bank does not have its own ATMs/PoS/Micro-ATMs. Before explaining the merits of acquiring ATMs, the issue of acquiring PoS/Micro-ATM is being detailed below since it is more important for DC-CBs to have PoS/Micro-ATMs vis-à-vis ATMs.

5.1 Key Features

a) PoS is a portable device which is provided to the Shop/Merchant Establishment where the Card can be swiped to pay for goods/services. The card holder is thus relieved of the need to carry cash to purchase goods and services. This device is provided to the Shops/Merchant Establishments by the Acquiring Banks with a view to earn Fee from the transactions con-ducted on these devices. In addition, the busi-ness of these shops/merchant establishments accrues to the Acquiring Banks.

b) PoS is linked to the CBS of the Acquiring Bank through PoS Switch. Since the PoS Switch is linked to other banks through NFS, the card holder of any other bank can swipe the card at the PoS.

c) The installation of PoS involves costs, like the cost of PoS device, networking of PoS with the Switch and the cost of the Switch. The merit of installing PoS thus depends upon the fee earn-ing vis-à-vis costs of installing PoS.

d) Micro-ATM is an improved PoS like device, with additional facilities of biometric identi-fication of the card holder, printing of trans-action and mini account statement. Like PoS, the cardholder can be of any bank linked to the NFS.

5. Installation of PoS/Micro-ATM

e) Micro-ATM is primarily to provide basic bank-ing facilities to the cardholder through various outlets engaged by the banks as their Business Correspondents. Banks are increasingly opting to install Micro-ATMs in the unbanked areas for financial inclusion of the people residing in unbanked areas. DCCBs are likely to play an important role in this financial inclusion effort, apart from their captive requirement of providing RuPay Kisan Cards to the members of PACS.

17

Vendors Approved by NPCI for providing PoS/Micro-ATM* Switch Solution

5.2 Key components of PoS/Micro-ATM facility

a) RBI approval for Merchant Acquiring b) PoS/Micro-ATM Device – the portable hard-

ware c) Software Solution -

i) The PoS/Micro-ATM Switch Solution, inte-grated with the Switch installed for issuing RuPay Cards.

ii) The software installed in the PoS/Micro-ATM to integrate communication between the Switch and the device

iii) SIM installed in the device to provide con-nectivity between the device and the Switch

5.3 Acquisition of PoS/Micro-ATM Switch Module

a) Banks have the option of either acquiring the Switch on ownership basis or availing the ser-vices on ASP Model, depending upon the op-tion exercised by them for the Card Switch. If the Card Switch is on ownership basis, the

1 ATOS 6TH Floor, A Wing, Prism Tower, Mindspace, Link Road, Malad West, Mumbai – 400064 Tel: +91 (22) 4042 4000

2 Prizm Payments Silver Metropolis‚ 3rd Floor‚ Jai Coach Compound‚ Goregaon (E)‚ Mumbai-400063 Tel:+91 (22) 39541800

3 In Solutions Global 6th Floor Palm Spring Above Croma Link Road Malad (West)Mumbai : 400064 Maharashtra ,India Tel:(022) 67603200

4 FSS 502 A 5th Floor South Block, TIDEL IT Park 4 Canal Bank Road Teramani Chennai: 600113 Tamil Nadu, India. Tel : (44) 22540251 22540261

5 OPUS Opus Software Solutions (P).Ltd. - Commerzone, 1st Floor, Building No.4, Samrat Ashoka Path, Off Airport Road, Yerwada, Pune- 411 006, Maharashtra-India Tel: +91 - 20 6627 2100/3092 5100

6 Atom Technologies Ltd. FT Tower, CTS no: 256 & 257, Suren Road, Chakala, Andheri (East), MUMBAI - 400 093 TEL+91 22 67698300

7 TCBIL Tata Communications Plot # C-21 and C-36 Block G, Bandra Kurla Complex Bandra (East), Mumbai 400098 Tel +91 22 66578765

8 Banktech 3rd floor, Sigma Chambers 1307,HAL 3rd Stage, Jeevan Bhima Nagar Main Road, Bangalore-560075 Tel:91-80-43574400

9 MRL Posnet MRL Posnet Pvt. Ltd, No.134/62, Greenways Road, Raja Annamalai Puram, Chennai - 600028, Tamil Nadu, India Tel:044 24955569

* Some of these vendors may not be ready with the Micro-ATM device, meeting Micro ATM Standards of UIDAI Version 1.5.1 specifications. Banks may ascertain the facts before inviting the bids.

solution for PoS/Micro-ATM may also be on ownership basis.

b) The solution should meet the specifications laid down by NPCI. Banks may contact NPCI in this regard.

c) The vendors given by NPCI (http://www.npci.org.in/) for providing the PoS/Micro-ATM* Switch Solution are given in the table below.

d) Key points of reference for selection of the Vendor:

i) Approved by NPCI/Compliance with NPCI Specifications

ii) Integration with the Switch, CBS and NFSiii) Upgradation in line with NPCI require-

ments from time to timeiv) 24 x 7 support at different locations

e) Licensing Terms:i) Limitation on the Number of Transactions/

Cards/Channels/Devices – present or future ii) Right of use by Associates/BCs/Agencies/

Subsidiariesf ) Price Points:

i) Fixed Cost (one time – for Integration/Inter-facing with Bank and NPCI), Com-missioning

Contents | 18

ii) Transaction (Switching) Fee - Financial Transactions/Non-financial Transactions

iii) Basis of Fee – Fixed or per Transaction, Flat Rate or Graded on the basis of Volume , all inclusive or any exclusion, any minimum per month criteria

iv) Project Implementation, Training/Supportv) Exclusions: Hardware, third party software etc.vi) Customization cost

g) Customization requirements and time linesh) Availability of regulatory and normal reportsi) Support for additional/future MIS requirements j) Turn Around Time k) Implementation time, training, support meth-

odology l) Training to Implementation Teamm) Hardware requirement and other dependenciesn) Data Centre Integrity, Safety and Confidentialityo) DRC at a different seismic zonep) Quality Assurance, Certifying Authority, Date,

Validity etc.q) Problem/Critical Support Management Sys-

tem and Turn Around Time r) Warranties for Performance (uptime) and Data

Securitys) Solvency of the Vendor - for long term suste-

nance and supportt) Reference Check with an existing client –

onsite visitu) Annual Maintenance Contract

5.4 Acquisition of PoS/Micro-ATMs

These devices are usually owned by the banks. There are not many options currently available to acquire these devices on lease/rent.

5.4.1 Key issues for selection of the device

a) Compliance with Specifications laid down by NPCI. PoS service provider need to be certified by NPCI

b) Delivery Period and dependenciesc) Integration with the software solutiond) Performance Warrantye) Upgradation in line with NPCI requirements

frotime to timef ) 24 x 7 support at different locationsg) Solvency of the Vendorh) Complaint Critical Support Management Sys-

tem, Methodology for resolution of problems, Turn Around Time

i) Annual Maintenance Contract/Annual Techni-cal Support Terms

j) Reference Check with existing client – onsite visit

5.4.2 Illustrative list of vendors in the Indian market for the PoS/Micro-ATM Device

a) Verifoneb) Ingenicoc) PineLabsd) Innovitie) PAXf) M Swipeg) Ezetap

5.4.3 Standard Operating Procedures Detailed Process and Procedural Guidelines for activities relating to PoS/Micro-ATM, like-

a) BC Managementb) Servicing of Micro-ATMc) Cash Logistics Managementd) Reconciliatione) Monitoring of Uptimef ) Security

5.5 NABARD’s support for installation of PoS/Micro-ATM

NABARD provides financial support to DC-CBs to promote installation of PoS/Micro-ATMs at unbanked locations. The key features of the scheme are:

5.5.1 Eligibility

a) CBS enabled Cooperative Banks b) Adherence to certification standards as speci-

fied by various agencies

5.5.2 Scope of support

a) Cost of Micro ATM / POS terminals upto Rs. 25,000/- per terminal

b) Cost of integration charges between POS and CBS server

19

5.5.3 Extent of support

a) 100% in North Eastern Region, Sikkim, Jammu & Kashmir, Uttarakhand, Jharkhand, Himachal Pradesh, Chhattisgarh and Anda-man & Nicobar Islands

b) 90% in the rest of the country

5.5.4 Duration of Support

For a period of 3 years5.5.5 Pattern of assistance a) The concerned Cooperative bank may work

out a project report covering the total number of POS terminals and the cost of integration between POS terminals and CBS of the bank.

b) The assistance thereafter will be on reimburse-ment basis for -

i) Cost of POS terminals ii) Cost of integration charges between POS

and CBS server

5.5.6 Other conditions

a) Should be owned by the bank and conform to the standards specified by IBA-IDRBT and UIDAI 1.5.1 standard)

b) The assessment for the POS terminals / micro ATMs may be done as under -

i) No. of branches where the terminals are to be placed

ii) No. of PACS to be covered andiii) Spare terminals as backup in the bank (upto

10% of the total, if requested by the bank)

5.5.7 Operationalisation of Scheme

NABARD has extended the support for technol-ogy support for operationalisation of ATM, POS terminals / micro ATMs. Banks may approach the Technology Service Provider (TSP) approved by NPCI for each of these services.Banks to apply to NABARD on prescribed Ap-plication Form - Annexure ‘C’.

Checklist for On-Boarding to the NFS and RuPay platform

1. Pre-Project Initiation

a. Ensure ASP (Application Service Provider) Switch Vendor is in place. (NPCI Certified or any other Switch Vendor will need additional NPCI Switch Certification)

b. Ensure Switch Vendor can provide Hardware Security Module (HSM) and Debit Card Management System capabilities (DCMS).

c. Ensure negotiation and tie up with a Sponsor Bank. A Sponsor Bank can be any Bank who is a member of the NFS Network of NPCI. For a list of existing NFS Member banks please visit http://www.npci.org.in/nfsatm.aspx

d. Ensure the required documentation and neces-sary agreements are completed.

e. Ensure a Card Vendor is selected by the Bank. In some cases the ASP provides this facility, else Bank has to appoint a card vendor from the empanelled list available with NPCI.

f. Ensure CBS and Switch level integration is completed

g. Ensure all technical developments are in place as per NPCI RuPay Online Switching Specifi-cations Version 1.5.1

h. Ensure Business Plans for Debit Card issuance and P & L management is in place

i. Ensure Liquidity Manager limits are set in con-junction with the Sponsor Bank

2. Project Tracking

a. Kick Off discussions with NPCI, Sponsor Bank and ASP

b. IIN Issuance by NPCIc. Card Design finalization with necessary ap-

provals from Bank and NPCId. Welcome Kit and Marketing Collateral finali-

zation with necessary review from NPCIe. Test Cards, Track Data Verification, CVD vali-

dation and Test Card templates

Contents | 20

Project Plan for On-boarding under Sponsorship Model.

f. Host to Host Certification and Testingg. Sharing of Test results, UAT Scripts Sign Offh. Sharing of Production Keys and Production

Movementi. Pilot Go Livej. Full Go Live with all NFS Member Banks

3. Post Implementation Tracking

a. Ensure Reconciliation and Settlement systems are in place in accordance with NPCI / RBI Guidelines

b. Ensure RuPay Card Issuance as per Bank’s Business Plans

c. Ensure RuPay Card marketing activities and customer education are rolled out

d. Ensure Branch Staff training in RuPay Debit card issuance and other RuPay related products

e. Ensure customer service facilities like, Call Centre, Help Desk are up and running

f. Ensure systems are in place for speedy redressal of customer grievances as per RBI guidelines

g. Ensure systems are in place to track ATM De-clines and put in place appropriate measures to control the same.

S.No Project Head Tasks to be accomplished Responsible

1 Project Initiation Kick off discussion & Sharing of project details. Submission of pre-requisite format to Banks.

NPCI

2 IIN IssuanceMember to confirm SMS / DMS Product Type Bank

IIN assignment after confirmation of product type (SMS/DMS) NPCI

3 Card Designs

Sharing of RuPay Card & Marks Specifications, list of NPCI Approved vendors with the Bank

NPCI

Bank to share the design files with its Card Vendor Bank

Bank to share its Card Vendor details to NPCI Bank

Bank to send card design for approval by NPCI (Artwork proof) Bank

Card Design approval by NPCI NPCI

Post production, laser proof & 5 sample cards from production lot to be submitted to NPCI

Bank

4Marketing Collaterals

Marketing collateral and sample card envelope files to be shared Bank/NPCI

NPCI to review the marketing collateral etc and review NPCI

Bank to take up with their vendor for marketing collaterals Bank

Bank to send hard copy of final marketing collaterals to NPCI for records Bank

5CVD Verification and Track Data

Sharing of test keys, CVD calculation logic, key exchange process documents NPCI

Bank to share the keys with their vendor, vendor to generate test card data with the RuPay Test Keys ONLY

Bank

Bank to ensure their vendor sticks to the RuPay Track 1 and Track 2 specifications as per the card and mark specs document

Bank/ASP

Bank to send sample embossa file generated from above step Bank/ASP

CVD & Track 1-2 data correctness to be checked by NPCI NPCI

21

Project Plan for On-boarding under Sponsorship Model.

S.No Project Head Tasks to be accomplished Responsible

6Network Connectivity and Testing

Handover of Test Cases NPCI

Handover of Transaction Dump ( Test Transaction Data Dump)

Connectivity Checklist NPCI/ASP

Network Compliance Form

Bank side interface development (Between Bank switch and NPCI Net)

Letter from ASP for completion of their internal testing with the sub member ASP

Bank to confirm on Interface readiness Bank/ ASP

Issuer to provide confirmation on message dumps before commencing certification

30 Physical test cards and test card details Bank/ASP

Bank to send completed test cases template along with contact details of Bank’s testing team

Bank/ASP

Verification & validation of the data received by NPCI NPCI

Sharing of Network Details (test switch- IP and Port) NPCI/Bank

System Readiness Testing (to check the network connectivity) ASP

Mail is sent to NFS implementation team to seek a time slot for testing & commence the testing

NPCI and Bank/ASP

Testing to Start NPCI/Bank

Testing review NPCI

UAT Testing NPCI AND Bank

UAT Offline Review NPCI

Provide sign off for UAT offline testing NPCI/Bank

UAT Script preparation (online) and sending to Bank NPCI

Bank to give sign off for UAT scripts Bank

7 Production Keys

Bank to give names of 3 custodians for sharing of production keys Bank

Production keys to be sent to Bank by COURIER ONLY NPCI

Confirmation of production key check value match from Bank Bank/ASP

8Production Movement

NPCI to share network details in production environment with Bank NPCI

Get production Port, Bank code, and acquirer ID from NFS production team NPCI

Share Bank Production IP after confirming with Network team ASP/NPCI

Actual port opening

Production movement

Go Live Documents 22

Pilot Go Live, bin update and test transactions

Final production and go live date Bank and NPCI

Contents | 22

As explained earlier, the acquisition of ATM is not necessary to issue RuPay Cards. The RuPay Cards are acceptable at all ATMs and PoS/Micro-ATMs linked to NFS installed by any bank. The Card Issuer Bank is however required to pay In-terchange to the Acquiring Bank for the transac-tions conducted by the Issuer Bank’s Customers on Acquiring Bank’s ATM/Some DCCBs may nevertheless like to install ATMs for business considerations like:• Better customer service• Earning profit due to scope of earning high In-

terchange fee• Enhance image of the bank To be able to install own ATMs, the bank will be required to install ATM Switch module in their Switch, apart from installing the ATMs. Given below are the key points of action:

6.1 Acquisition of ATM Switch Module

Just as required for installing PoS/Micro-ATMs, the bank would be required to acquire ATM

6. Installation of ATM

Module of the Card Payment Switch. It will be acquired from the vendor who has supplied the Card Payment Switch. Following key reference points may be kept in view while acquiring the ATM Module:

1. Key points of reference for selection of the Vendor:a) Approved by NPCI/Compliance with NPCI

Specificationsb) Upgradation in line with NPCI requirements

from time to timec) Integration with the Switch, CBS and NFSd) 24 x 7 support at different locations

2. Licensing Terms:a) Limitation on the Number of Transactions/

Cards/Channels/Devices – present or future

23

b) Right of use by Associates/BCs/Agencies/Subsidiaries

3. Price Points:a) Fixed Cost (one time – for Integration/Inter-fac-

ing with Bank and NPCI and Commissioning)b) Transaction (Switching) Fee - Financial Trans-

actions/Non-financial Transactionsc) Basis of Fee – Fixed or per Transaction, Flat

Rate or Graded on the basis of Volume , all inclusive or any exclusion, any minimum per month criteria

d) Project Implementation, Training/Supporte) Exclusionsf ) Customization cost

4. Customization requirements and time lines5. Availability of regulatory and normal re-

ports6. Support for additional/future MIS require-

ments 7. Turn Around Time 8. Implementation time, training, support

methodology 9. Training to Implementation Team10. Hardware requirement and other depend-

encies11. Data Centre Integrity, Safety and Confi-

dentiality12. DRC at a different seismic zone13. Quality Assurance, Certifying Authority,

Date, Validity etc.14. Problem Management System and Turn

Around Time, Critical Support Manage-ment System

15. Warranties for Performance (uptime) and Data Security

16. Solvency of the Vendor - for long term sus-tenance and support

17. Reference Check - with an existing client – onsite visit

18. Annual Maintenance Contract

6.2 Acquisition of ATMs

Banks have option to either acquire it on owner-ship basis or on ASP Model.

6.2.1 Ownership Basis

a) The ATM is a high cost item. Besides, it oc-

cupies space for which considerable amount is spent on furnishing and maintenance. In ad-dition, there is a cost attached to guarding the ATM 24 x 7.And if the ATM is installed off-site, there is additional expenditure in providing con-nectivity and in regular servicing of the ATM.

b) Key issues for selection of the ATM on owner-ship basis –i) Compliance with NPCI Specifications/

Technical specifications as per Software Solution

ii) Upgradation in line with NPCI require-ments from time to time

iii) Installation costiv) Security Systemsv) Delivery Period and dependenciesvi) Integration with the software solution in

terms of products and servicesvii) Performance Warrantyviii) 24 x 7 support at different locationsix) Solvency of the Vendorx) Complaint Management System – Methodol-

ogy for resolution of problems, Turn Around Time, Critical Support Management System

xi) Annual Maintenance Contract/Annual Technical Support Terms

xii) Reference Check with existing client – onsite visit

c) Networking Solutioni) In case of on-site ATM, there is no ad-

ditional effort in connectivity as the net-working facility for CBS is used for ATM as well.

ii) In case of off-site ATMs, the bank is re-quired to incur recurring expenditure to connect the ATM with the CBS. Depend-ing upon the location of the site, banks choose either landline on lease or VSat connection. In addition, the standby con-nection is also installed as a backup.

d) Outsourcing of ATM Servicingi) Many banks outsource servicing of owned

ATMs. Under this, Vendor takes care of the maintenance, cash servicing, security etc.

ii) Banks provide requisite cash to the ASP Vendor on day to day basis.

iii) The Vendor undertakes reconciliation of entries. iv) The arrangement with the Vendor is usu-

ally based on fixed monthly charges.e) Standard Operating Procedure

Contents | 24

Banks are required to lay down detailed process and procedures for operations and maintenance of the ATMs. Some of the key activities are listed below:

i) Daily Servicing of the ATMii) On-line monitoring of Cash levelsiii) Reconciliation of physical balance with

Machine Balance and the CBSiv) Monitoring of Uptimev) Maintenance of the Security Systemsvi) Upkeep of the ATM premises including

supply of stationeryvii) Maintenance of the Machine, consumablesviii) Provision and Supervision of Security

Guardsix) Complaints/Dispute Management

6.2.2 ASP Model

There are 3 types of ASP Models. Key Features of each Model are described below:a) ATMs owned by the Bank but managed by the

ASP Vendori) ATM owned by the Bankii) Premises owned/rented by the Bankiii) All other items also owned by the Bankiv) Cash is provided by the bank on day to

day basis as required to load in the ATMv) All ATMs are connected to the Switch

owned by the ASP Vendorvi) The Switch is connected to the CBS and

the NFSvii) The transactions are routed to the CBS

and to other banks (through NFS)viii) Reconciliation, Cash Management, Dis-

pute Management, ATM Premises Man-agement, Security Guard etc. are the re-sponsibility of the ASP Vendor

ix) Stationery is provided by the Bankb) ATMs owned and leased by the ASP Vendor

i) Capital investment is done by the ATM vendors. So, bank need not lock its funds in capital expenditure

ii) The identification of ATM site is mutually agreed upon between the bank and the vendor.

iii) The connectivity, power arrangement, ne-gotiation of rent, furnishing of the interi-ors of the ATM site etc. are taken care of by the vendor

iv) ATM carries Brand and logo of the bank

v) Vendors receives transaction based Fee from the bank

vi) Outsourcing of servicing of the ATM to an outsource agency frees the bank from the day to day maintenance of the ATM and the ATM site

vii) If ATM Switch is on ASP model, the bank is also freed from managing the Switch and related activities

viii) There are several Service Providers which are offering all or a combination of these services

ix) Thus practically all activities and invest-ment relating to ATM rests with the Ser-vice Providers. Bank is left with only pro-viding cash for uploading the ATMs and managing customer accounts

c) White Label ATMs i) ATMs are owned by the ASP Vendor, of-

fering complete solution under its own name

ii) Banks’ logo is not displayed on the ATM Site

iii) ATM offers common services to multiple banks on shared basis

iv) Banks pay Fee on transaction basis to the Service Provider

v) White Label ATM is in the nascent stage in India at present. RBI has issued detailed guidelines for eligibility to offer and man-age this type of facility

vi) Currently, most of the banks are on first model.

6.3 Illustrative list of ATM manufacturers and ASP Vendors for ATM

6.3.1 ATM Manufacturers

a) NCR Corporation b) Diebold Systems c) Wincor Nixdorf

6.3.2 ASP Vendors

a) FSSb) Prizm Paymentsc) Tata Communications

25

d) AGS Transact Technologies e) Euronet India

6.4 NABARD’s support for ATM

6.4.1 Objective

Cooperative banks are being encouraged to pro-vide RuPay Kisan Cards to their clients. These cards will be used on ATMs / micro ATMs with agri-vendors which will result in operational ex-penditure for the cooperative banks. This scheme is an effort to partly meet this cost.

6.4.2 Eligibility

All Cooperative banks which are fully CBS ena-bled and have issued RuPay Kisan cards are eligi-ble for support under the scheme.

6.4.3 Scope and pattern of support

a) The support is only for KCC transactions. b) The scheme covers only operational cost. c) No capital expenditure is covered. 6.4.4 Types of Support

Three types of supports available under this scheme:a) ATM Add-on Support for CBS - If the bank

is running its CBS on ASP model, then an amount upto Rs. 580/- per branch per month is reimbursed. If the bank runs its CBS on ownership model, then an amount upto Rs. 20,000/- will be reimbursed per branch as one time cost. Support for ASP model is extended for a period of 3 years.

b) Switching Fee - An amount of up to Rs. 3/- per transaction for all transactions will be re-imbursed towards switching fee charges.

c) Inter-change / Transaction charges - The in-terchange fees / transaction charges upto Rs.

15/- per KCC transaction arising out of the use of RuPay Kisan Cards on an ATM other than the parent bank including that of white label ATMs (as and when these ATMs will be de-ployed in the field) will be reimbursed.

6.4.5 Extent of support

a) 100% in North Eastern Region, Sikkim, Jammu & Kashmir, Uttarakhand, Jharkhand, Himachal Pradesh, Chhattisgarh and Anda-man & Nicobar Islands

b) 90% in the rest of the country

6.4.6 Duration of Support

The assistance for this scheme is on reimburse-ment basis and the banks can forward their claims to ROs every quarter. The support will be extend-ed till March 2014 with the scheme subject to review thereafter.

6.4.7 Operationalisation of Scheme

a) It is recommended that cooperative banks adopt the ASP route for providing ATM ser-vices to their clients considering the huge capi-tal expenditure involved in establishing and maintaining an ATM network as well as inad-equate level of comfort with advanced banking technology in the cooperative banks.

b) Upon stabilization of the system, the coopera-tive bank may forward a letter to NABARD, informing about number of RuPay Kisan Cards issued to its farming clientele. The con-cerned NABARD Regional Office will provide an approval for the same after verifying the claim.

c) Later, on a quarterly basis, the cooperative bank may approach NABARD for reimburse-ment along with system generated information of the various expenditures.

Banks to apply to NABARD on prescribed Ap-plication Form - Annexure ‘C’

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Annexure ‘A’-ATM Transaction Flow

Sub-membership Model

27

Liquidity Management Process Flow

Source: NPCI

Contents | 28

Annexure ‘B’-List of Vendors for Card Design & Manufacture Currently Approved by NPCI

S. No. Name of the Company Card Manufacturing Card Personalization Contact Details

1. Versatile Card Technology (VCT)

Yes Yes Sridhar T.SVersatile Card Technology (P) Limited AC21, SIDCO Industrial Estate 4th Main Road Thirumudivakkam, Chennai-600 044Tel: +91- 44-24781551. Fax: +91-44-24781571Mobile: +91-9840085206E-mail: tss@vct.co.in

2. MCT Cards & Technology Yes Yes Rajesh Shet MCT Cards & Technology Pvt.Ltd.Plot No. 22 A, Shivalli Industrial Area, Manipal, Karnataka - 576104 Tel: +91-820-2574826 Fax: +91-820-2574827 Mobile: +91-9845518223 E-mail: rajesh.shet@manipalgroup.info

3. DZ Card (India) Pvt. Ltd. Yes Yes Shailesh PatelDZ Card (India) Pvt. Ltd Tel: +91-124-4128888 Fax: +91-124-4128899 Mobile: +91-9871998994 E-mail: shailesh.patel@dzcard.com

4. M-Tech Innovations Ltd. Yes Yes Kapil Gandhi Plot No. 1/2, Rajiv Gandhi Infotech Park, Phase I, Hinjewadi, Pune 411057Phone:- +91-20- 22934880/22932080 Ext:-254 Tele Fax :- +91-20- 22933139 Mobile :- +91 98500 39631 E-mail: development@m-techindia.com

5. Oberthur Technologies India Pvt. Ltd

Yes Yes Atul Jain Oberthur Technologies India Pvt. Ltd, A – 201, Sec – 63 Noida – 201303 (U.P.) Phone:- +91-9811142455 E-mail: a.jain@oberthur.com Priyanka Singh Phone:- +91-9699333779 E-mail: p.singh3@oberthur.com

6. Madras Security Printers Private Ltd.

Yes Yes Johnny Vitkar Head – Western Region, Madras Security Printers Pvt. Ltd. 72. T.H. Road, Chennai 600081 Phone:- +91-9987005829E-Mail:-johnnyvitkar@gmail.com

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List of Vendors for Card Design & Manufacture Currently Approved by NPCI

S. No. Name of the Company Card Manufacturing Card Personalization Contact Details

7. Giesecke & Devrient (G & D)

Yes Yes Shyam BalakrishnanSr. Sales Manager – MSMS Commercial Bank Giesecke & Devrient India Pvt. Ltd. Plot No. 218, Block A, Okhla Industrial Area, Phase I, New Delhi – 110020 Mobile: +91 7738037483 mailto:shyam.balakrishnan@gi-de.com

8. CMS Infosystems Pvt. Ltd.

No Yes Mr. Mokam SinghSr. Business Manager CMS Info Systems Pvt. Ltd. Silver Metropolis, 11th Floor, Western Express Highway, Goregaon ‘East’, Mumbai – 400063. Landline:022-67553219 Mobile – 09619858787 Email Id:mokam.singh@cms.com

9. Gemalto Digital Security Pvt. Ltd.

Yes Yes Anand G. DhuriManager Secure Transaction 8th Floor, Hallmark Business Plaza, Bandra Kurla Complex, Bandra (east), Mumbai -51, India Landline:022-30945800 Mobile – 09820845822Email Id: anand.DHURI@gemalto.com

10. Syscom Corporation Ltd. Yes Yes Mr. Jerome Bouvard Vice President –APAC Industrials Operations Plot No. 60-61 NSEZ, Dadri Road, Phase-II , Noida ,Uttar Pradesh Tel No. +91-120-4710835 jerome.bouvard@morpho.com Mr. Rajan Misra Vice President, Payment & Transit D-216, Sector-63, Noida-201 301, NCR of Delhi, India Tel No. +91-120-4072932 rajan.misra@morpho.com

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Annexure ‘C’ - Format for Submitting KCC proposal - Cooperative Banks

Ref. No: Date:

The Chief General Manager, NABARD,...............................…….. Regional Office

Dear Sir,

Proposal for assistance under FITF for RuPay KCC cards, Micro ATMs & other related operational expenditure

We hereby submit a project seeking Grant Assistance under prevailing guidelines of FITF.

1. Technical details of the bank are as under:a) Implementation date of CBS in the bank: ………………………….b) No of bank branches on CBS: ………………………….c) Name of CBS vendor: ………………………….d) CBS Model (Ownership/Sponsorship): ………………………….e) Name of the Sponsor bank (ATM services): ………………………….f) Name of the Technical Service Provider (TSP) for ATM&POS network: ………..g) Name of vendor & model number of the Micro ATMs being purchased: ……………

2. NPCI has allotted the following IIN number(s) to our bank:a. IIN for RuPay Aadhaar Kisan Card is: ……………………………b. IIN for RuPay without Aadhaar Kisan Card is: …………………………….

We confirm that:a. The bank’s Board has approved undertaking of this project in its ….. Board Meetingheld on

…………….. .b. The designs of both Aadhaar & Non-Aadhaar cards have been approved by NPCI.c. We have issued instructions to our branches to open Aadhaar based Accounts and updation of

existing Accounts with Aadhaar No. wherever Aadhaar No or Aadhaard. Enrolment No. is available.e. Micro ATM devices complying with UIDAI 1.5 standards and any subsequent modifications

thereafter will be purchased.3. In this connection the following information relating to project particulars along with respective

costs is being submitted:

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Sr. Details of support Number Amount

1 Number of KCC accounts in the bank NA

2 Number and cost of KCC RuPay ATM cards @ ` .. each

3 Number of Micro ATMs owned by the bank to be employed with PACS @ `…. each. With PACS / branches Upto 10% additional back up machines

4 Cost of Micro ATM - CBS integration (*)

5 Inter-change fees paid on RuPay KCC card transactions on re-imbursement basis (**)

6 ATM Add on support Cost per branch per month on ASP model OR One time cost per branch for 3 years in Ownership model

7 Switching Fee ( For Cooperatives on Sponsorship model for joining NFS (***)

(*)Cost details as agreed between service provider and the bank required to be submitted along with the project.

(**) Interchange fees paid by the bank will be submitted for re-imbursement by NABARD along with a CBS generated file clearly showing RuPay KCC transactions.

(***) System generated details of the Switching Fee charges, supported by NABARD on a reimbursement basis, will be provided by the bank along with the claim.

We also confirm that the above RuPay KCC cards will be issued by …….. and Micro ATMs will be operationalized by ……… .

Yours Faithfully

Chairman /General Manager

This form can be downloaded from https://www.nabard.org/pdf/Handbook.pdf

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Glossary

Acceptor Any trading or service establishment that accepts, on its own behalf or on behalf of its network, the payment of goods or services via an electronic money instrument

Acquirer The entity or entities that hold(s) deposit accounts for card acceptors (merchants) and to which the card acceptor transmits the data relating to the transaction. The acquirer is responsible for the collection of transaction information and settlement with the acceptors.

Acquiring Bank Bank which has provided PoS to the shop/Merchant Establishment

Alternate Delivery Channels/Alternate Channels

Alternate Delivery Channels are channels and methods for providing banking services directly to the customers. Customers can perform banking transactions through their ATM, Micro-ATM, PoS, contact the bank’s Call Center for any inquiry, access the digital Interactive Voice Response (IVR), perform transactions through Internet Banking, and even on smart phones through mobile banking, etc.

ASP Application Service Provider – the third party Vendor who owns, manages and distributes software-based switch services and solutions to various banks on pay per use/rental basis

ATM Switch Switching Solution along with the Card Management System for ATM

Authentication The methods used to verify the origin of a message or to verify the identity of a participant connected to a system and to confirm that a message has not been modified or replaced in transit.

Automated Teller Machine (ATM)

an electromechanical device that permits authorized users, typically using machine-readable plastic cards, to withdraw cash from their accounts and/or access other services, such as balance enquiries, transfer of funds or acceptance of deposits. ATMs may be operated either online with real-time access to an authorization database or offline.

BC Business correspondents are bank representatives who help villagers to open bank accounts, do banking transactions. (deposit money, take money out of savings account, loans etc.). The Business Correspondent carries a mobile device where person ives his thumb impression or electronic signature, and get the money.

Biometric Method of identifying through matching a unique physical characteristic of a person, e.g. thumb impression, voice recognition or retina

Card Vendor Vendor engaged in printing Card, PIN mailer and Welcome Kit etc.

CBS Core Banking Solution

Contact cards Cards that require physical contact through an electronic connection surface between the card and the card reader or terminal device.

Contactless Cards that do not require physical contact between the card and the card reader or terminal.

DCCB District Central Cooperative Bank - DCCBs function as a link between the PACS and State Cooperative Banks (SCBs). They are basically meant for meeting the credit requirement of PACS. They also undertake banking business such as accepting deposits from public, collecting bills, cheques, drafts etc. and providing credit to the needy persons. The area of operation varies from taluk to district but in most of the states their operations are confined to the taluk level. Membership of the DCCBs is open to individuals and societies working in its area of operation

DMS Dispute Management System– Grievance redressal mechanism put in place by NPCI to resolve any customer complaints regarding cash withdrawals at ATM

33

DRC Disaster Recovery Centre

Enterprise License Acquiring Software Solution on ‘Ownership Basis’ without any restriction on number of Users/Transactions etc.

HSM Host Security Module– Digital Keys Management system attached to the Server to prevent tampering of data through encryption and decryption of messages/data

IIN Issuer Identification Number allotted by NPCI to uniquely identify a Card Issuer Bank in an international interchange environment. All IINs assigned are six digit numbers and are the first six digits of a card.

Interchange Fee payable by the Card Issuer Bank to the acquiring bank for allowing its customers to do transactions at the acquiring bank’s ATM/PoS

Interchange fee Transaction fee payable in the context of a payment card network by one participating financial institution to another, for example by an acquirer to a card issuer in respect of a card payment by the cardholder to the card acceptor (merchant).

Inter-operability Technical compatibility between different systems

Issuer Bank The bank which issues the card to its customer

Liquidity Manager System installed in NPCI Data Centre to setup Limits for keeping minimum balance to cover the settlements of the bank’s transactions. It works as a limit check for approving/declining transactions

MICRO-ATM A small Hand-held Device (like PoS) connected to CBS, having ATM like facilities, operated by a person on behalf of the bank, with biometric reading facility

NFS The National Financial Switch facilitates routing of ATM transactions through inter-connectivity between the Bank’s switches thereby enabling the citizens to use any ATM of the connected bank. It is maintained by NPCI.

NPCI National Payments Corporation of India - the umbrella organization of all retail payment systems in India is set up by the banks in India with the support and guidance from RBI and Indian Banks’ Association. It has been mandated to build central infrastructure for payment systems like ATM Switching, Mobile Payments, Cheque Truncation System, POS Switching, 24*7 remittance system and Financial Inclusion transactions. It has also a mandate to build a domestic card payment scheme, RuPay. http://www.npci.org.in/

Off –us Transactions A card transaction in which issuer and the acquirer are separate entities. For ‘off- us’ transactions, authorization will be routed through the NPCI network. NPCI will perform the clearing & settlement for both the members (Issuer & Acquirer).

Online Exchange of Data between different processing systems directly without any intervention

On-us Transactions A card transaction in which issuer and the acquirer is from the same entity.

Ownership Basis Software Solution acquired under License from the Software Company for own use

PIN Personal Identification Number– A numeric code which the cardholder has to enter for verification of identity for conducting an electronic transaction. It is deemed equivalent of signature and hence it must not be disclosed by the cardholder to anyone.

Point of sale This term refers to the use of payment cards at a retail location (point of sale). The payment information is captured either by paper vouchers or by electronic terminals, which in some cases are designed also to transmit the information. Where this is so, the arrangement may be referred to as “electronic funds transfer at the point of sale”.

PoS Point of Sales Terminal – a portable device provided to Shops/Merchant Establishments by the “Acquiring Bank” with the facility to execute payment transactions of a customer through swiping of Card

Micro-ATM Switch Switching Solution along with the Card Management System for Micro-ATM

PSS Act Payment and Settlement Systems Act, 2007 of RBI

RRB Regional Rural Bank

RuPay Debit Card Card for operations in Customer’s Bank Account, on RuPay Platform managed by NPCI

RuPay Kisan Card KCC Card issued to farmers, operated on RuPay Platform managed by NPCI

Contents | 34

SCB The state co-operative bank is a federation of central co-operative bank which come under the State Co-operative act of respective state and acts as a watchdog of the co-operative banking structure in the state. Its funds are obtained from share capital, deposits, loans and overdrafts from the Reserve Bank of India. The state cooperative banks lend money to central co-operative banks and primary societies and not directly to the farmers.

Server Computer that provides services through a network to other computers

Settlement Process of settlement of payments between members

SMS Platform Single Message System - Messages between the acquirer and the issuer to (a) Authorize a financial transaction (b) Post a financial transaction to a cardholder’s account

Sponsor Bank The primary bank (already a member of the NFS) which offers its own networking platform to another bank for joining the NFS

Switch An electronic device that connects multiple computers together. Hardware to operate the Payment Switch

Switch fee Transaction fee set by the network organization and paid by the card issuing institution to the organization for the cost of routing transaction information.

Switching Routing of interbank ATM and POS transactions through a shared network.

UID 1.5.1 / IBA-IDRBT Standards

Standards, which specify functional, hardware and Interoperability requirements to bring uniformity in micro ATMs in use with the objective to have standardized bio metric transactions. All micro ATMs in the country have to comply with these standards.

UIDAI Unique Identification Authority of India – Authority appointed by Government of India to provide identification (Aadhaar number) to each resident across the country.

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

GIZ NABARD Rural Financial Institutions Programme

L-20, Green Park (Main)New Delhi 110016

T +91 11 26526024/25. F +91 11 26528612E detlev.holloh@giz.deI www.giz.de