Retail Electronic Payment Systems – NEFT / NECS / RECS / ECS – Levy of Processing Charges

Retail Electronic Payment Systems – NEFT / NECS / RECS / ECS – Levy of Processing Charges

The era of free lunch is over. As the volumes in Retail Electronic Payment Systems are zooming up, the various participants are looking forward to reduce their operating costs.

So far, the RBI had been waiving processing charges for retail electronic payment products (NEFT, NECS, RECS and ECS) since the year 2006 in order to promote the usage of these systems.

The last waiver by Reserve Bank of India was valid up to March 31, 2011. 

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6453&Mode=0

Today, vide RBI Notification No RBI/2010-11/559,DPSS (CO) EPPD No. /2649/ 04.03.01/2010-11, RBI has permitted   Clearing Houses / processing centers to levy charges on the originating banks as under :-

·        25 paise (exclusive of service tax) for every outward transaction

·        25 paise (exclusive of service tax) for every return transaction

The compensation to destination banks, to be paid by the originating banks is also finalized as under:

·        25 paise (exclusive of service tax) for every credit transaction

·        50 paise (exclusive of service tax) for every debit transaction

RBI has made it clear that the participant banks are not permitted to pass on these charges to customers.

 These charges will be applicable from July 01, 2011.

RTGS is not under Retail Electronic Payment Product; hence the charges for RTGS transactions are not covered under this notification.

These charges should encourage new players to set up processing centers and also enable the existing Clearing Houses / processing centers, to strength their infrastructure.

Of course, customers would not prefer to revert back to paper based from electronic mode, due to these charges.