Delivery Channels in Retail Banking: CAIIB Retail banking (Module C),Unit 2
We all know that CAIIB exams are conducted by the Indian Institute of Banking and Finance (IIBF). CAIIB is said to be one of the difficult courses to be cleared for the bankers. But we assure you that with the help of our “CAIIB study material”, you will definitely clear the CAIIB exam.
CAIIB exams are conducted twice in a year. Candidates should have completed JAIIB before appearing for CAIIB Exam. Here, we will provide detailed notes of every unit of the CAIIB Exam on the latest pattern of IIBF.
So, here we are providing “Unit 2: Delivery Channels in Retail Banking” of “Module C: Marketing in Retail Banking” from “Optional Paper: Retail Banking”.
The Article is CAIIB Unit 2: Delivery Channels in Retail Banking
Physical / Direct Channels
- Branch: A branch, banking center or financial center is a retail location where a bank, credit union, or other financial institution offers a wide array of face-to-face and automated services to its customers.
- Extension Counter: Extension counters provide limited banking services such as deposit/withdrawal transactions, issuing and encashment of drafts and mail transfers, issue and encashment of travellers cheques, sale of gift cheques and collection of bills.
Electronic & Remote
Automated Teller Machines (ATMs)
- An automated teller machine also known as an Automated Banking Machine (ABM) is an electronic telecommunication device that enables the customers of a financial institution to perform financial transactions, particularly cash withdrawal, without the need for a human cashier, clerk or bank teller.
The Services Normally Offered At An ATM Are:
- Cash withdrawal
- Cash Deposit
- Account information
- Regular bills payment
- Balance Enquiry
- Mini Statements
- Money Transfer
- Purchase of Re-load Vouchers for Mobiles
Types Of ATMs
- White Label ATM: White Label ATMs are those ATMs which set up, owned and operated by non-bank entities. To aid financial inclusion and drive ATM penetration in the country the Reserve Bank of India has permitted the launch of White Labelled ATMs (WLAs) i.e private non-bank companies to set up, own and operate its own brand of ATMs in the country. These white label ATMs will not display logo of any particular bank. TATA launched the first white label ATM in India under the brand name of Indicash.
- Brown Label ATMs: These ATMs are owned and maintained by service provider whereas a sponsor bank whose brand is used on ATM takes care of cash management and network connectivity.
- Onsite ATMs: These are ATM machines that are set up in the premises where there is a bank branch so that both the physical branch and the ATM can be used. This is known as being on site and this can be used for several purposes. Many people can use this to avoid the lines that are present in the branch and hence save on the time required to complete their transactions.
- Offsite ATMs: These are the machines that are set up on a standalone basis. This means that the bank has a place where there is only an ATM machine then this becomes an offsite ATM. This is done to ensure that the bank reaches out to more geographical areas and that people are able to use its services even when there is no bank branch in the area.
Point-of-sale (POS) terminal
- A point-of-sale (POS) terminal is a computerised replacement for a cash register which can process credit and debit cards. A customer needs to enter a card PIN to complete the transaction using the PoS terminal.
How to install one?
- If you are a merchant, then you can request the bank where you have an account to install PoS machines at your establishment.
What are the charges?
- The end-customer does not have to pay any charges for swiping his or debit/credit cards at the PoS terminals.
Separate charges for debit and credit cards
- MDR is capped for debit cards but not for credit cards. Effective July 1, 2012, RBI capped the MDR for debit cards at 0.75 per cent of the transaction amount for value up to Rs.2,000 and 1 per cent for a transaction amount for value above Rs.2,000. For credit cards, the MDR varies between 1.5 per cent to 2.5 per cent. Following the withdrawal of legal tender status to the old Rs.500 and Rs.1,000 currency notes, RBI had asked banks to waive off the MDR till the end of December. Last week, RBI also lowered the MDR cap for debit cards effective between January 1 to March 31, 2017. In this period, MDR is capped at 0.25 per cent for debit card transactions up to Rs.1,000 and 0.5 per cent for transactions above Rs.1,000 up to Rs.2,000.
- Mobile banking is a facility which enables customers to initiate and/or perform banking tasks on their mobile phones. This is provided by most of the banks in India and abroad. Customers can use mobile banking to view their account balance, make instant fund transfers and pay bills, etc.
- There are various types of mobile banking, viz. via SMS, USSD and mobile apps. Some of the banks like SBI, have incorporated services like loan approval and linking of insurance policy in their mobile banking apps. Let us read the features and benefits of mobile banking and how to use mobile banking.
Banks provide mobile banking services to their clients in the different ways listed here:
- Mobile Banking over mobile applications (for smartphones; e.g. SBI Yono and iMobile by ICICI Bank, etc.)
- Mobile Banking over SMS (also known as SMS Banking)
- Mobile Banking over Unstructured Supplementary Service Data (USSD)
Immediate Payment Service (IMPS)
The full form of IMPS is an Immediate Payment Service. It enables 24 x 7 electronic fund transfer services in which the transaction is carried out between two bank accounts in real-time and on an immediate basis. IMPS fund transfer can be done through online banking as well as mobile banking. Immediate Payment Service was launched in 2010 and is now one of the most widely-used forms of electronic payments across India.
Objectives of IMPS
- To enable bank customers to use mobile instruments as a channel for accessing their banks accounts and remit funds
- Making payment simpler just with the mobile number of the beneficiary
- To sub-serve the goal of Reserve Bank of India (RBI) in electronification of retail payments
- To facilitate mobile payment systems already introduced in India with the Reserve Bank of India Mobile Payment Guidelines 2008 to be inter-operable across banks and mobile operators in a safe and secured manner
- To build the foundation for a full range of mobile based Banking services.
IMPS Transfer via MMID and Mobile Numbers
- With IMPS it’s easier to transfer money through your mobile number. All you need to do is register your mobile number for IMPS service with your bank (can do it online as well). If not online you can visit the nearest bank branch and get this done. Once your mobile number is registered, you will be given a 7-digit MMID code from your bank. MMID code is essential to initiate IMPS transfers through your mobile number.
With your MMID number, the funds can be transferred easily using the following steps:
- Simply log in to your mobile banking app with your User ID and password
- You will see the fund transfer section on the app, there you can select the IMPS option
- Now enter the beneficiary’s details like the bank account number, mobile number, and the MMID code
- After this, you can simply verify the transaction using an MPIN or by entering the OTP sent you to via SMS
Unified Payments Interface (UPI)
- Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience.
- With the above context in mind, NPCI conducted a pilot launch with 21 member banks. The pilot launch was on 11th April 2016 by Dr. Raghuram G Rajan, Governor, RBI at Mumbai. Banks have started to upload their UPI enabled Apps on Google Play store from 25th August, 2016 onwards.
Features of UPI
- Immediate money transfer through mobile device round the clock 24*7 and 365 days.
- Single mobile application for accessing different bank accounts.
- Single Click 2 Factor Authentication – Aligned with the Regulatory guidelines, yet provides for a very strong feature of seamless single click payment.
- Virtual address of the customer for Pull & Push provides for incremental security with the customer not required to enter the details such as Card no, Account number; IFSC etc.
- Bill Sharing with friends.
- Best answer to Cash on Delivery hassle, running to an ATM or rendering exact amount.
- Merchant Payment with Single Application or In-App Payments.
- Utility Bill Payments, Over the Counter Payments, Barcode (Scan and Pay) based payments.
- Donations, Collections, Disbursements Scalable.
- Raising Complaint from Mobile App directly.
Participants in UPI
- Payer PSP
- Payee PSP
- Remitter Bank
- Beneficiary Bank
- Bank Account holders
UPI – Benefits to the Ecosystem participants
Benefits for banks:
- Single click Two Factor authentication
- Universal Application for transaction
- Leveraging existing infrastructure
- Safer, Secured and Innovative
- Payment basis Single/ Unique Identifier
- Enable seamless merchant transactions
Benefits for end Customers:
- Round the clock availability
- Single Application for accessing different bank accounts
- Use of Virtual ID is more secure, no credential sharing
- Single click authentication
- Raise Complaint from Mobile App directly
Benefits for Merchants:
- Seamless fund collection from customers – single identifiers
- No risk of storing customer’s virtual address like in Cards
- Tap customers not having credit/debit cards
- Suitable for e-Com & m-Com transaction
- Resolves the COD collection problem
- Single click 2FA facility to the customer – seamless Pull
- In-App Payments (IAP)
BHIM UPI Payments App
- BHIM or Bharat Interface for Money, is a complete payment solution app that works on the Unified Payments Interface (UPI) system. BHIM is a digital payment method that allows users to make various transactions such as sending and requesting money with a Virtual Payment Address (VPA) on a real-time basis. Money can be sent and received instantly on all 365 days in a year on a 24/7 basis. The service can also be used on bank holidays.
- There is no need to provide bank account details such as account number or IFSC code, all transactions can be carried out using a VPA. Customers can directly pay users using their VPA or scan and pay using the QR code option in the BHIM app.
Features of BHIM App:
- Instant money transfer: With the BHIM app, money can be sent on a real-time basis at anytime and from anywhere. Also, there is no cumbersome process of adding beneficiary and filling up account details such as account number and IFSC code.
- No bank holidays: The best part about this app is that you can send and receive money even on bank holidays and weekends.
- Split bill with friends: The app also allows users to split bills with multiple users.
- Payment reminders: Another feature of this app is the facility to schedule payment reminders.
Benefits of BHIM App
- Transactions are simple, fast, and secure
- No additional charges
- The app is free for download
- Payments can be made to non-UPI banks as well
- The app works 24/7
How to Enroll Yourself as a Merchant on UPI
- Download the BHIM Aadhaar Baroda Pay Android App
- Fill the application form and sign the merchant agreement
- The bank will carry out the on-boarding registration process and agreement through its regions/zones
Transaction Limit and Charges of BHIM
- You can make a transaction where the maximum amount is Rs.10,000. The maximum amount of money you can transfer within 24 hours is Rs.20,000. There are now charges for making a transaction via the BHIM UPI app.
What is Internet Banking?
Internet banking, also known as online banking or e-bankingor Net Banking is a facility offered by banks and financial institutions that allow customers to use banking services over the internet. Customers need not visit their bank’s branch office to avail each and every small service.
Features of Online Banking
- Check the account statement online.
- Open a fixed deposit account.
- Pay utility bills such as water bill and electricity bill.
- Make merchant payments.
- Transfer funds.
- Order for a cheque book.
- Buy general insurance.
- Recharge prepaid mobile/DTH.
Advantages of Internet Banking
The advantages of internet banking are as follows:
- Availability: You can avail the banking services round the clock throughout the year. Most of the services offered are not time-restricted; you can check your account balance at any time and transfer funds without having to wait for the bank to open.
- Easy to Operate
- Time Efficient
- Activity Trackin
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