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Difficulty: Very hardElectronic Banking Services and Payment Systems

A corporate treasurer needs to disburse monthly salary payments to 5,000 employees holding accounts across various commercial banks. The organization seeks a cost-effective e-banking mechanism designed specifically for high-volume, bulk payment processing that settles transactions in deferred net batches rather than processing each instruction individually in real time. Which electronic banking payment channel is most suitable for this requirement?

  1. NIBSS Electronic Funds Transfer (NEFT) operating via an Automated Clearing House (ACH) batch systemAnswer
  2. B
    Real Time Gross Settlement (RTGS) system executing immediate individual transaction clearing
  3. C
    Point of Sale (POS) payment infrastructure utilizing merchant acquiring gateways
  4. D
    Automated Teller Machine (ATM) interbank network using card switch protocols

Answer

NIBSS Electronic Funds Transfer (NEFT) operating via an Automated Clearing House (ACH) batch system
NIBSS Electronic Funds Transfer (NEFT) operating through an Automated Clearing House (ACH) is designed for bulk electronic payments. It batches payment instructions submitted by corporate organizations and clears them at designated intervals throughout the business day, providing a cost-effective solution for high-volume distributions such as payroll.

Step-by-Step Solution

1
Analyze the operational requirements of the payment scenario
Identified key requirements: disburse bulk payments (5,000 transactions), interbank transfer, cost efficiency, and deferred net batch settlement capability.
Categorizing the parameters narrows down whether an immediate gross or batch net settlement mechanism is required.
2
Compare electronic payment channels against batch processing vs. real-time processing characteristics
Automated Clearing House (ACH) electronic funds transfer (such as NEFT) aggregates large volumes of payment instructions and settles them in designated batches, optimizing transaction fees for payroll.
RTGS handles high-value single transactions instantly, while retail switches (ATM and POS) handle individual consumer transactions.
3
Select the correct electronic banking channel matching the criteria
NIBSS Electronic Funds Transfer (NEFT) via ACH batch processing directly fulfills the corporate payroll criteria.
ACH batch systems are designed specifically for scheduled, low-cost, high-volume disbursements.

Key Concept

Electronic Banking Settlement Systems: ACH/NEFT vs. RTGS and Retail Payment Channels
Estimated Time:1m 30s
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Topics

Electronic Banking Services and Payment Systems

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