What is NetPayment, and how does it differ from ACH?
Payments
Asked by Question Bot09/Feb/20121 answer
1 Answer
F
Faisal Khan
Answered 09/Feb/2012
Netpayment is the logical progression to the decades old ACH system. It essentially follows the framework (in a crude sense) of IBFT (Interbank Funds Transfer), where by funds transfers transactions posted electronically is verified and executed in real-time.
This is done by various methods in different countries, but essentially relies on the premise of using the ATM switch to verify the account (Title fetch) and confirm the balance in the account. You can also do this verification via the Debit card switch (which again essentially ties into the ATM switch).
For settlement, it seems, Netpayment is using the concept of RTGS (real-time gross settlement) but more micro based. They can take advantages of networks like PLUS or Cirus to do this.
Albeit, I cannot comment on the exact route taken by Netpayment as to how they are executing the transaction, my bet is they are using the ATM switch in some manner to do the title fetch and account validation and then inject an interbank funds transfer request, which for some banks may be near real-time or batch processed.
ACH is the online equivalent of the typical cheque clearing that is done today (transfer electronic files for payments to be made), pass these files to the appropriate banks for clearing and then net-off the differences and settlement occurs. The issue with ACH is until the actual clearing happens, you do not know if the cheque will be honored or declined due to NSF (Non-Sufficient Funds).
It would be great to have someone from Netpayment explain their working to us.
This is done by various methods in different countries, but essentially relies on the premise of using the ATM switch to verify the account (Title fetch) and confirm the balance in the account. You can also do this verification via the Debit card switch (which again essentially ties into the ATM switch).
For settlement, it seems, Netpayment is using the concept of RTGS (real-time gross settlement) but more micro based. They can take advantages of networks like PLUS or Cirus to do this.
Albeit, I cannot comment on the exact route taken by Netpayment as to how they are executing the transaction, my bet is they are using the ATM switch in some manner to do the title fetch and account validation and then inject an interbank funds transfer request, which for some banks may be near real-time or batch processed.
ACH is the online equivalent of the typical cheque clearing that is done today (transfer electronic files for payments to be made), pass these files to the appropriate banks for clearing and then net-off the differences and settlement occurs. The issue with ACH is until the actual clearing happens, you do not know if the cheque will be honored or declined due to NSF (Non-Sufficient Funds).
It would be great to have someone from Netpayment explain their working to us.