BankBiz ATM Service
Due to limited resources and know-how, co-operative banks have historically had tie-ups with technology providers who automate branches, set up ATMs, and issue proprietary ATM cards — which only work on the co-op bank's own ATMs. As a result, there are fewer transactions, higher cost per transaction, and lower ROI.
Why Connect to NFS?
Connecting to the National Financial Switch (NFS) allows co-operative banks to be at par with larger commercial banks, giving customers access to a country-wide ATM network. Once co-op bank ATMs are driven by our switch, they can acquire transactions from NFS member cardholders and earn revenue. This increases transaction volume on ATMs, reduces the cost per transaction, and increases ROI.
Problems in Connecting Co-op Banks with NFS (Conventional Method)
Minimum requirements to connect to NFS conventionally include:
- A stable Core Banking System available 24x7 to process ATM transactions
- Proper EFT Switch infrastructure with HSMs of required standard for cryptographic PIN verification
- Direct RTGS Membership and a current account with RBI for settlement
- Trained manpower to manage and maintain the infrastructure
- Huge capital and recurring expenditure, unjustified for the low volume of cards a typical small co-op bank will issue
From NPCI's point of view, it is tedious to certify and deal with each individual co-op bank wanting to connect to NFS, considering the large number of such banks.
Solution: NFS Sub-Membership under Sponsor Bank / ASP Model
- Co-operative bank joins NFS as a sub-member — requiring only a 24x7 available CBS and connectivity to a shared EFT switch provided by the ASP
- EFT Switch infrastructure is provided by an ASP certified by NPCI
- The EFT switch drives the ATMs and POS terminals of co-operative banks, enabling the bank to act as acquirer for other NFS members' cards
- ASP's EFT switch also hosts the card database for the co-operative bank, enabling NFS network participation as an issuer
- An approved Sponsor Bank handles settlement of transactions on behalf of sub-member banks
- Sponsor Bank also front-ends dispute management and assists in Recon and DMS
Why the Sponsor Bank / ASP Model is Ideal
- ASP has already made the investment in EFT Infrastructure and is NPCI-certified for Switch-to-Switch connectivity with NFS
- ASP offers EFT Switching Services on a shared model, saving the co-op bank from huge capital expenditure while increasing revenue and customer satisfaction
- Co-operative bank need not have direct RTGS membership or a current account with RBI
Settlement Process
The Co-op Bank becomes a sub-member of an existing NFS member bank (the "Sponsor Bank") acting as Settlement Banker. The Sponsor Bank:
- Handles settlement of all transactions on behalf of its sub-member banks
- Sets liquidity limits for sub-member co-op banks on NFS
- Is responsible for disputes management
- Assists sub-member in Reconciliation and DMS with required software and interfaces
Transaction Flow
- Co-op Bank issues "RuPay" cards with the bank's Unique BIN to its customers
- Co-op Bank customers can transact at any NFS Member Bank ATM for withdrawal or balance inquiry
- Transactions are routed to the ASP switch under which the co-op bank BIN is configured on NFS
- NFS Liquidity Manager checks against the co-op bank level limit before routing to the ASP switch and then to the co-op bank's CBS for authorization
- If sufficient customer balance exists, the transaction is approved and payment is sent back to the NFS Member Bank Switch
- NFS sends settlement reports to the Sponsor Bank and ASP for settlement and reconciliation