NEFT 2.0 from Phi Commerce

The National Electronic Funds Transfer or NEFT payment mode has been in existence for a reasonably long time. Started in 2005, the system allows bank customers to transfer funds between any two NEFT-enabled bank account. By facilitating one-to-one funds transfer, it supports the electronic transfer of funds from a customer’s bank account to any individual having an account with the same or another bank. Unlike real-time gross settlement or RTGS, fund transfers through NEFT system do not occur in real-time; they are settled in half-hourly batches, with no settlements on Sundays or public holidays.

The NEFT Process

Because of the ease with which inter-bank transactions can be made, NEFT is popularly used by customers for transferring funds. Unlike credit cards, NEFT is comparatively less expensive; MDR on cards is high and large banks often charge a percentage of transaction fee for net banking. In contrast, NEFT transactions are charged a fixed amount which is quite minimal. Also, since there are multiple NEFT settlement timings in a day, merchants can technically receive funds the same day and all the payments received are auto-reconciled.

The NEFT process is pretty straightforward:

  1. Registration of payee: Whenever a customer wishes to make a NEFT payment, he/she has to first register the payee as a beneficiary. By logging into their internet banking application, the payer fills an application form with details of the payee including the person’s name, account number, bank name, branch, IFSC code and account type.
  2. Funds transfer: Once the payee has been successfully registered as a beneficiary, the payer logs in to his/her internet banking application, selects the payee, mentions the amount to be transferred and makes the payment. On successful payment, a URN (unique reference number) is generated.
  3. Merchant end process: At the merchant end, money is credited to their account. They receive one or multiple files from their bank with details of credit and corresponding URNs.

But…There are some Issues with NEFT

Although NEFT is being used by a sizeable portion of the population one of the major drawback faced by merchants is:

  • When merchant receive money via NEFT, details of the payment are rarely available. Although merchant can clearly see the amount transferred, very often, they do not know from whom you’ve received the amount and for what purpose – this can be confusing, especially if you receive several NEFT payments in a day. Most merchants adopt to manual reconciliation process which is prone to error and time-consuming.

Phi Commerce’s Value Add to NEFT

Phi Commerce offers a more efficient means of inter-bank payment transfer. It enables payers to transfer money to the payee in a quick and efficient manner. The process is simple and straightforward.

  1. Generation of virtual account number: Whenever payer opts for a NEFT payment option, he/she receives a unique “Virtual Account Number” (VAN) along with other bank details such as account name, bank name, branch name and IFSC code.
  2. Registration of payee: The customer registers this VAN as payee in their internet banking application. This VAN is unique to a consumer and remains valid throughout the association of the consumer with the merchant.
  3. Payment: At the time of payment, the payer makes payment to this VAN.

While this is very similar to the regular NEFT transactions, the real benefit starts after this.

  • As soon as the funds are received by the sponsor bank of Phi Commerce, Phi Commerce systems receive real time intimation.
  • Since the VAN generated by Phi Commerce is unique to a customer, Phi Commerce, through its real-time integration with merchant systems, updates the payment receipt in the merchant’s system.
  • This automation completely eliminates the need for customers/ payers to communicate the URN to the merchant and does away with the manual reconciliation of credits received in merchant system.
  • What’s more? Phi Commerce also provides summary settlement reports which can be used to reconcile credit received by the merchant. With built-in dashboards offered by Phi Commerce, merchants can also easily and efficiently track settlements.

Thousands of merchants trust the PayPhi Digital Enablement Suite to deliver a superior payment experience to their customers. We endeavor to transform the Indian digital payment scenario with easy-to-use and powerful digital payment solutions – and the NEFT 2.0 is just a step towards that!


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