Payments and Account Reconciliation

The latest RBI notification released to Banks in India partipating in RTGS and NEFT notified over the week end on Aug 13, 2010(RBI /2010 - 11/169), seeks to define standards for account reconciliation for return instructions of RTGS and NEFT transactions in India. This is another one in the series of regulations deviced to provide clear information on payment and payment status to the end customers. This notification deals with relating a returned instruction to the initial instruction and to reflect the same on account statement. A similar notification released a few months ago for NEFT created a new message for sending confirmation to the originating bank on the successful credit of a transaction at the beneficiary. This information has to be communicated to the originating party by e-mail or SMS if available.

When the payment system is designed, the people involved - the bank, software vendors, regulators and many others tend to ignore a key actor - the customer.

There are many such information that the customer needs to be aware of - the time when the payment will reach the beneficiary, the location where the payment currently is, cost, information of re-schedulement of a payment, time and date of actual delivery and more such. The information can be made available to the customer by default, by demand or on subscription. Rather than doing a piece meal deal, RBI can go the full length and standardize the communication requirements to the end customers of the bank.

This communication strategy is nothing new. There are standards defined as a part of PSD - The payments services directive in Europe that define among others information that has to be given to the customers. Payment Systems are vehicles that transport funds and are systemically important infrastructure for the economy. Defining certainty and transparency are crucial for transactions that these payments support.

Another issue to consider is the life of this information. One should not forget that this information could be required long after the transaction is completed. The account statement is perhaps the most important container of information to the customer. It is important to provide the customer significant handle on the account statement to address any subsequent query. Using the handle sufficient infrastructure should be provided to access further details.

For many in the software industry customer statements and advices are side players to the larger power horse being built. It may indeed be a by product of a process but for many this statement is the main actor and not just a bit player.