NFS Operating and Settlement Guidelines (NFS-OSG)

Transcription

1 NFS Operating and Settlement Guidelines (NFS-OSG) A procedural document that defines the operating and settlement guidelines for the members of the NFS network that mandates the members to follow predefined standard procedures to ensure smooth, secure, and effective operation of the network.

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3 Version Issue Date Author Document History Reviewed by Approved by Revision History 2.0 Mar, 2014 Mr. Amit Bhatnagar Mr. Gururaj Rao Mr. Ram Sundaresan Revised NFS Common Operating Procedures (COP) 2.1 May, 2016 Mr. Abhay Parekh Mr. Gururaj Rao Mr. Ram Sundaresan NFS Common Operating Procedures (COP) and Settlement Procedures (SP) documents are merged into one single document Operating Circulars issued since Mar, 2014 are incorporated V 2.1 Page 2 of 92

4 Introduction Purpose National Financial Switch Operating and Settlement Guidelines (NFS-OSG) is a procedural document that defines the operating and settlement guidelines for the members of the NFS network to follow. It mandates all the members on the NFS network to follow certain standard procedures to ensure smooth, secure, and effective operation of the network. Audience Contents NFS-OSG is to be used by all the members participating in the NFS network along with the relevant internal teams at NPCI. NFS-OSG contains detailed information on operating and settlement guidelines for the members of the NFS network to follow. The information is organized in a manner to enable users to swiftly and easily identify the piece of information they need. The information is divided into ten sections, with the tenth section covering the annexures. The table of contents clearly elucidates all information in NFS-OSG through a numbered section-wise break up. Topics covered include: Section 1: An overview of National Financial Switch (NFS) network Section 1 provides an overview of NFS network and details regarding the membership structure, transactions fees, availability of NFS network, issues related to security, and NFS network operations. Section 2: NFS Services: Role of NPCI Section 2 elaborates the key services provided by NPCI through the NFS network. The section covers member notification, NFS steering committee and its composition, transaction authorization requirements, monitoring, audit by NPCI, settlement, daily reports, reconciliation, and adjustment to settlement. Section 3: Operating procedure for members Section 3 covers settlement account, process for withdrawal and cessation of membership, modalities of settlement, connectivity, settlement procedures, reversal transactions, maintaining transaction records, resolution of errors, disputes, and adjustments of transaction, remedial actions, data protection liability of a defaulting member, use of NFS network logo/trademark and advertising rules, confidentiality, intellectual property rights, nondisclosure agreement, arbitration, V 2.1 Page 3 of 92

5 indemnification, compliance with NFS-OSG, amendments, deviation, and certification. Section 4: Operating procedure for issuer members Section 4 talks about ATM and Cards, card standards, Personal Identification Number, designated primary account number, card issuer system requirements, requirements of authorization system, transaction service, performance, and BIN table maintenance. Section 5: Operating procedure for acquirer members Section 5 covers ATM service, ATM base, ATM standards, acquirer members requirement, performance, and ATM information. Section 6: Introduction of sub-members in the NFS network Section 6 provides details on participation of sub-members in the NFS network. Section 7: Operating procedure for settlement agency Section 7 covers the role of NPCI as a clearing and settlement agency for settlement of interbank transactions between the issuing and acquiring members participating in the NFS network. Section 8: Settlement procedure Section 8 outlines the procedures for the settlement process through which NPCI, as a settlement agency, would credit/debit the amount based on the summary-level data received from NFS. Further, the section covers settlement mechanism, reconciliation & settlement reports, network cutover time, exception handling, settlement currencies, holiday settlement, settlement basis, settlement confirmation, process for handling transactions not settled due to data loss, and NPCI contact information. Section 9: Administrative policies and procedures Section 9 highlights the authority of NPCI, responsibilities in dispute resolution, Dispute Resolution Mechanism, records, procedure for termination/suspension of NFS membership, and penalties. Section 10: Annexures Section 10 lists out 16 annexures relating to card specification, message response codes, glossary, dispute mechanism based on dispute types, bulk upload format, raw file format, NTSL/DSR format, verification file format, verification reversal file format, BIN update format, Covering letter format and Cash certificate format. V 2.1 Page 4 of 92

6 List of figures and tables Figure No. Figure Name Page No. 1 Transaction fee structure 14 2 Services NPCI provides through the NFS network 17 3 Process for withdrawal of membership 21 4 Events when a member would cease to be a member 22 5 Member Connectivity Direct and through service provider 23 6 Types of ATM services 31 7 Transaction flow 32 8 Value added services 36 9 NPCI as a clearing and settlement agency for inter-bank Transactions between issuing and acquiring member Settlement Reporting Process 49 Table No. Table Name Page No. 1 Cash withdrawal settlement entries (Net of reversals, if any) 22 2 Settlement entries for non-financial transactions (Net of reversals, if any) 23 3 Settlement entries for card-to-card fund transfer (Net of reversals, if any) ATM location details to be sent in DE # 43 Daily settlement reports uploaded by NPCI in the DMS server Key Contact details 54 7 NFS DMS Contact Information (Help Desk) 55 V 2.1 Page 5 of 92

7 Table of Contents Document History... 2 Introduction National Financial Switch (NFS) ATM Network Overview Membership structure Membership criteria Reporting of ATM locations Membership fee Interchange Transaction switching fees Availability of NFS network Security NFS network operations Message formats Transaction logging NFS Services: Role of NPCI NFS service offerings Member notification NFS steering committee Composition and terms of office of NFS steering committee Transaction authorization requirements Monitoring Audit by NPCI Settlement Reports Reconciliation Adjustment to settlement Adjustments to fees Operating procedure for members Settlement account Intention to withdraw from NFS membership Cessation of Membership V 2.1 Page 6 of 92

8 3.4 Modalities of settlement Financial transactions - Cash withdrawal Non-financial transactions Non-Financial - Card-to-Card Fund transfer Connectivity Settlement procedures Reversal transaction Maintaining transaction records Resolution of errors, disputes, and adjustments of transaction Remedial actions Data protection Liability of the defaulting member NFS network logo/trademark Advertising rules Confidentiality Documentation NPCI service provider liability Intellectual property rights Non-disclosure agreement Arbitration Indemnification Compliance with NFS-OSG Amendments Deviation Certification Operating procedure for issuer members ATM and Cards Card standards Personal Identification Number Designated primary account number Card issuer system requirements Requirement of authorization system Transaction service V 2.1 Page 7 of 92

9 4.8 Performance Successful Transaction Denied Transaction Response Time Accuracy Failure to perform BIN table maintenance - Issuer Operating procedure for acquirer members ATM services ATM base ATM standards Receipt requirement Dispensing capability Partial dispensation of cash by ATM Cash retraction Capability to read data from tracks Acquiring members trademark Captured cards Acquirer members requirements Acceptance of cards BIN table maintenance - Acquirer ATM operation requirements Performance ATM time-outs Accuracy Failure to perform ATM information Standards for correct identification of ATM locations Location Introduction of sub-members in the NFS network Operating procedure for settlement agency Role of NPCI as settlement agency Settlement procedure V 2.1 Page 8 of 92

10 8.1 Settlement mechanism Settlement reporting and reconciliation Daily settlement reports Raw data files Settlement (STL) files NTSL files Verification Issuer File (VERIF files) and Verification Acquirer File (VERAF) Verification Reversal Report Network cutover time Exception handling Settlement currency Holiday settlement Settlement basis Settlement confirmation Process for handling transactions not settled due to data loss Process to be followed by NPCI Process to be followed by Members NPCI s Contact Information Administrative Policies and Procedures Authority of NPCI Responsibilities in dispute resolution Dispute Resolution Mechanism Stage I - Chargebacks Stage II - Representment Stage III - Pre-Arbitration Stage IV - Arbitration Debit /Credit adjustments Good faith Records Termination/suspension of NFS membership Criteria for termination/suspension of NFS membership Process of NFS membership termination/suspension Prohibition to use NFS logo/trademark V 2.1 Page 9 of 92

11 9.5.4 Prohibition to use NFS network Ongoing rights and obligation of debarred members Penalties Frequent deviation from NFS-OSG Pending Dues Invoicing Annexures Annexure A: BIN Update form Annexure B: Card Specification Encoding Annexure C: Issuer Raw Data file Annexure D: Acquirer Raw Data file Annexure E: Issuer STL file Annexure F: Acquirer STL file Annexure G: Daily Settlement Report format Annexure H: Issuer Verification file Annexure I: Acquirer Verification file Annexure J: Verification Reversal report Annexure K: Bulk Upload file format Annexure L: Dispute mechanism based on dispute types Annexure M: Covering letter format Annexure N: Cash Certificate format Annexure O: Message Response Codes Annexure P: Glossary V 2.1 Page 10 of 92

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13 1.0 National Financial Switch (NFS) ATM Network 1.1 Overview The Institute for Development and Research in Banking Technology (IDRBT), established by Reserve Bank of India in 1996 launched the National Financial Switch (NFS), to provide a congenial platform for growth and development of the ATM delivery channel. National Payments Corporation of India (NPCI), on authorization by Reserve Bank of India, took over the operations of National Financial Switch (NFS) from IDRBT from December NFS is a shared ATM network that interconnects NFS members and ATM switches. The main objective in creating NFS was to make ATM deployment economical and viable to members by pooling resources and thus, increase the use of ATM technology across the country. The NFS network will facilitate ATM transaction services among all members participating in this network. The transactions will include card transactions at ATMs of members and settlement of transactions that NPCI executes. 1.2 Membership structure All NFS members (such as those approved by the Reserve Bank of India (RBI) from time to time) who intend to participate in the NFS network should submit a membership application to NPCI Membership criteria NFS members must meet a list of criteria as approved by RBI from time to time before joining the NFS network. Following is the list of criteria for different types of members: Direct members It should have a valid banking license issued by the RBI. It should hold RTGS Membership of the RBI. It should have a current account with the RBI. Banks should route their ATM transactions through ATM switch. Sub-members Sub-members willing to join the NFS network should come through the sponsor bank to NFS. The settlement of the transactions of sub-members would be done in the books of the sponsor bank. White label ATM operators White Label ATM operators authorized by the RBI under the Payment & Settlement Systems Act 2007 to operate White Label ATMs in India should come through the sponsor bank to V 2.1 Page 12 of 92

14 NFS as per the extant guidelines of the RBI. The settlement of the transactions acquired on the White Label ATMs of the operator would be done in the books of the specified sponsor bank. As approved by the RBI, the White Label ATM operators may have arrangements with multiple sponsor banks Reporting of ATM locations On monthly basis members should provide details of the number of ATMs they have installed along with details of the location of such ATMs as per the format provided by NPCI. This information is additional to the details members provide at the time of on boarding Membership fee Each member joining the NFS network would have to pay a one-time subscription fee of 3,00,000 (three lakhs) plus applicable taxes including service tax (ST). In the NFS sponsorship model, the sponsor bank will have to pay a one-time fee of 6,00,000 (six lakhs) plus applicable taxes including service tax. In addition to the subscription fee, members have to bear the cost of establishing a connection between their ATM switch and the NFS network Interchange The card-issuing member pays to the card-acquiring member an interchange fee for each approved transaction for providing ATM services. Currently, the interchange is 15 for Cash Withdrawal and card-to-card fund transfer, and 5 for other non-financial transaction. NFS Steering committee reserves the right to amend interchange Transaction switching fees Card-issuing members would pay transaction switching fees of 0.45 per approved transaction to NPCI along with the applicable taxes including service tax. All fees would be part of the issuing member s net settlement report. The transaction fee structure is shown in figure 1 below: V 2.1 Page 13 of 92

15 Figure 1: Transaction fee structure Fee Schedule Nature of Transactions Current Interchange Fee Financial Transactions 15/- Non-Financial Transactions 15/- (Card to Card fund transfer) 5/- (All other non-financial) Bank Card Issuer Member Pays Pays Acquirer Member Interchange fee ( 15/ 5) Plus applicable taxes NFS Switching fee ( 0.45) Plus applicable taxes No transaction switching fees charged to Acquirer/WLAO by NFS 1.3 Availability of NFS network The NFS network will be operational round-the-clock with 99.5% uptime barring: Force majeure such as war and natural calamities. Two days notice given to the member by NFS for periodic maintenance. 1.4 Security NFS focuses on following two vital security issues: Encryption Hardware: Each ATM acquirer on the NFS network should use Hardware Security Module (HSM) for translation of PIN blocks. V 2.1 Page 14 of 92

16 PIN Encryption: Each PIN entered by the customer should be encrypted using Data Encryption Standard (DES). 1.5 NFS network operations Message formats All transactions routed through the NFS should comply with message specifications as specified by NFS based on ISO 8583 message format Transaction logging The NFS will maintain logs of all transactions passing through the NFS network. Under no circumstances would NFS retain the annals of PINs or disclose details of PINs accessible in unencrypted form to other members in the NFS network. V 2.1 Page 15 of 92

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18 2.0 NFS Services: Role of NPCI NPCI is the owner and co-coordinator of the NFS network and it would operate and maintain the NFS network. NPCI may undertake the task of operation and maintenance of the network on its own or it may use the services of a third-party service provider for this purpose. 2.1 NFS service offerings Following figure 2 shows the key services that NPCI provides through the NFS network: Figure 2: Services NPCI provides through the NFS network Networking of ATMs Switching of ATM transactions Settlement of ATM transactions Note: The NFS network services are not necessarily limited to the above list. 2.2 Member notification NFS will notify all members regarding: Inclusion of a new member to the NFS network through NPCI website. Cessation, suspension, and termination of membership through an Operating Circular (OC). Amendments to NFS-OSG through an OC. Enhancements to the software and hardware of the NFS network through . Changes in periodic maintenance schedules through . Any other issue deemed important through / letter / OC. V 2.1 Page 17 of 92

19 2.3 NFS steering committee The NFS steering committee comprising designated officials of NPCI and select NFS members reviews the functioning of the NFS network and discusses issues related to: NFS network security Operational issues Technical issues New business initiatives/product development including Interchange revision Any other issue deemed important such as regulatory compliance and industry requirements Composition and terms of office of NFS steering committee NPCI would be the permanent member of the NFS Steering Committee. The composition and terms of office of NFS steering committee are as follows: Steering committee cannot have more than 20 members. The tenure of members of the steering committee would be three years. The composition of the steering committee members should be such that not more than 50% of the members should be from the promoter banks and the rest should be from non-promoter banks. NPCI reserves the right to call any bank/member/entity as special invitee or induct as permanent member. 2.4 Transaction authorization requirements NFS will not authorize any customer transaction without receiving online confirmation from the card-issuing member. In other words, NFS will not intervene in issues related to card expiry date and PIN, etc. for any transaction. Rules relating to card issuer members are provided in section 4.0 of NFS-OSG. 2.5 Monitoring The entire operation pertaining to the NFS network is monitored by NPCI on its own or by any third party authorized by NPCI. 2.6 Audit by NPCI NPCI conducts an audit of the NFS related systems (including hardware and software) of the members as required by the appropriate regulatory authorities. NPCI will undertake such audits on its own or will use the services of an independent agency. Each NFS Member will be provided with a report on: The state of operations. V 2.1 Page 18 of 92

20 A description of the systems of internal control. Deficiencies if any, in the system. Further, each member should conduct annual internal audits pertaining to systems and processes of itself and its processing agents to comply with NFS-OSG. 2.7 Settlement NPCI will carry out all settlement pertaining to NFS transaction on T+1 basis for domestic transactions and as per the timeline (TAT) communicated for international transactions. However, the settlement with respect to exception transactions would be carried out within three working days following the date of receipt of claim by NFS. 2.8 Reports NFS would provide the following daily reports in electronic format through DMS: Raw data file Net settlement report (NTSL) Settlement file (STL) Verification file Other related reports 2.9 Reconciliation For transactions routed through the NFS network, the reports mentioned under clause 2.8 (except NTSL) for reconciliation and adjustment purposes, shall be provided to the members on daily basis and NTSL will be provided on the date of settlement Adjustment to settlement Discrepancies relating to reconciliation/adjustment done by members, based on reports furnished by NFS are the responsibility of the participating members. Such discrepancies should be resolved by members as per the settlement procedures set forth in the subsequent section later in the document Adjustments to fees The following points explain the fee adjustments: NFS determines the amount of service fees its members owe for using the NFS network. NPCI, as a service provider would maintain an account with the member participating in the NFS network. The switching fee charged to the participating members, will be credited to the member maintaining NPCI account, and would form part of the net settlement generated by NFS. V 2.1 Page 19 of 92

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22 3.0 Operating procedure for members All members participating in the NFS network should strictly abide by NFS-OSG as published by National Payments Corporation of India (NPCI). Further, it is important that members would also comply with operating circulars (OCs) and instructions issued by NPCI from time to time. 3.1 Settlement account The settlement account for NFS transactions is the current account/rtgs settlement account maintained by all members with RBI through which the inter-bank transactions are routed in the day-to-day banking activity. Before participating in the NFS network, all members should issue a letter of authorization to RBI for booking settlements through NPCI. 3.2 Intention to withdraw from NFS membership The process for withdrawal of membership is explained through the following figure: Figure 3: Process for withdrawal of membership A member intending to exit the NFS network should provide a ninety-day notice to NPCI On receipt of the notice, NPCI will inform other members of the same The member who intends to exit the NFS network will cease to be a member of the NFS network after expiry of the ninety-day notice period NPCI will disconnect a member from the NFS network on completion of ninety day notice period V 2.1 Page 21 of 92

23 3.3 Cessation of Membership The following figure illustrates events when a member would cease to be a member: Figure 4: Events when a member would cease to be a member Event 1 If RBI cancels the banking license of the member Event 2 If the member stops or suspends payment of its debts, ceases to carry on business, or goes into a state of liquidation Event 3 If the member fails to comply with the NFS-OSG Event 4 If the member is placed under moratorium or prohibited from accepting fresh deposits by RBI Event 5 In case of any notification issued by the judicial authorities or the government for freezing the current account with the RBI 3.4 Modalities of settlement The following section explains the settlement process between the card issuer and acquirer members Financial transactions - Cash withdrawal Table 1: Cash withdrawal settlement entries (Net of reversals, if any) Transaction Amount Interchange + Service Tax Switching Fees + Service Tax Debit Credit Debit Credit Debit Credit Issuer Acquirer Issuer Acquirer Issuer NPCI All amounts in ( ) V 2.1 Page 22 of 92

24 3.4.2 Non-financial transactions Balance Enquiry, Mini Statement, Pin Change, Cheque Book Request and Statement Request Table 2: Settlement entries for non-financial transactions (Net of reversals, if any) Transaction Amount Interchange + Service Tax Switching Fees + Service Tax Debit Credit Debit Credit Debit Credit NA NA Issuer Acquirer Issuer NPCI All amounts in ( ) Non-Financial - Card-to-Card Fund transfer Table 3: Settlement entries for card-to-card fund transfer transactions (Net of reversals, if any) Sr. No Issuer Acquirer Beneficiary Transaction Amount Interchange + Service Tax Switching Fees + Service Tax Debit Credit Debit Credit Debit Credit Issue* NPCI* 2 Issuer Beneficiary - - Issuer NPCI 3 Issuer Beneficiary Issuer Acquirer Issuer NPCI Issuer Acquirer Issuer NPCI 5 Issuer Beneficiary Issuer Acquirer Issuer NPCI Same Bank Different Bank All amounts in ( ) * Only if the Transactions are routed through NPCI 3.5 Connectivity Figure 5: Member Connectivity Direct and through service provider V 2.1 Page 23 of 92

25 All members participating in the NFS network are expected to maintain round-the-clock connectivity of their ATM network for NFS services with an uptime of 99.5% for ATM switches. 3.6 Settlement procedures Each member should follow settlement procedures laid down in Section 8 of this document. A penalty of 100 would be charged to the defaulting member for each instance of non-compliance of any provision of the settlement procedures. 3.7 Reversal transaction Reversal transaction would be initiated in the event of incomplete message communication between the acquirer member s ATM switch and NFS network. The detailed procedure for the reversal transaction is explained in the subsequent sections. 3.8 Maintaining transaction records Each member should maintain records of all transactions for a minimum period as stipulated by the laws. In case of disputes, members should keep records of all disputed transactions until the disputes are resolved amicably. Members should provide details of all disputed transactions to other members whenever requested. Details to be provided for the disputed transaction record include: Date, Time and Transaction Number ATM Identification (ID) Number ATM Location Card Number Requested Amount Amount Dispensed Amount Disputed 3.9 Resolution of errors, disputes, and adjustments of transaction For resolution of errors, disputes, and adjustments of transactions, participating members should collaboratively perform the following activities: Scrutinizing errors. Making necessary adjustments. Amicably settling disputes pertaining to the processing of transactions as and when required. Each member should follow the error resolution and adjustment procedures within the stipulated time specified in the subsequent section pertaining to settlement procedure and dispute resolution mechanism. V 2.1 Page 24 of 92

26 If any member/s is/are aware of malfunctioning or misuse pertaining to transactions in which it/they was/were involved, it will be the responsibility of such member/s to notify to the appropriate parties with all relevant documents, which are in its custody. All members would put in their best efforts to resolve the disputes. (For details of the Dispute Resolution Mechanism, please refer to Section 9.3 in this document.) 3.10 Remedial actions If a member of NFS comes across an incongruity owing to the wrong actions of another member, the member should inform NPCI immediately about such an incongruity. NPCI reserves the right to assess the seriousness of the wrong actions and take appropriate action which may include debarring the member temporarily or permanently Data protection It is the responsibility of all members participating in the NFS network to comply with the data integrity laws as applicable in India and guidelines issued in this regard by NPCI/RBI/IBA from time to time Liability of the defaulting member If a member fails to fulfill its commitment towards other members participating in the NFS network and such an action results in these members incurring losses in settlement or transaction fees, the member committing such an offence should make up completely for the loss. In such a case, funds available in the defaulting member s settlement account would be used to settle the claims at the earliest NFS network logo/trademark All members participating in the NFS network may use the NFS network trademark/logo for their ATMs or cards. However, they can use the trademark/logo for other special purposes only after prior written permission from NPCI Advertising rules All members participating in the NFS network should strictly adhere to the rules meant for advertising and promotion of the NFS network. The rules of advertising and promotion the members need to follow with regard to the NFS network are as follows: Standard logo or any other promotional material as authorized by NPCI should be displayed either on the ATMs or at the doors and windows of the ATM premises. Members can advertise and promote their participation in the NFS network by using the standard logo of the NFS network as authorized by NPCI. V 2.1 Page 25 of 92

27 Upon withdrawal or suspension from the NFS network, the respective member should stop using the NFS name, logo, and trademark. Further, the same should be removed from all locations of display with immediate effect, except for cards bearing the NFS network logo, which will cease on the expiry date of the card, whichever is earlier. The advertisement policy on the ATMs should conform to the guidelines of Department of Banking Operations and Development (DBOD), RBI Confidentiality Documentation Given the nature of the business relationship between NFS and its members, both would have access to sensitive information relating to NPCI s operations. Further, the documents shared by NPCI with regard to the NFS network contain confidential information to which members are privy. Disclosure of such sensitive information to parties that are not members of the NFS network would tantamount to breach of trust and may invite legal action, and result in termination of membership of the member committing such a breach NPCI service provider liability NPCI recognizes and acknowledges that information relating to customers of the members is protected and that the members have substantial legal obligations to ensure that such information is not disclosed to any person/entity. Each party should use the confidential information only for the purposes set forth in the service level agreement (SLA) and the relevant attachments to this agreement and should not disclose the confidential information. No member should remove any notice/disclaimers/legends relating to confidentiality and copyrights etc. from the documents containing confidential information. Further, members should implement safeguards and controls that are necessary/appropriate to ensure protection against unauthorized use or disclosure of confidential information. Each party may disclose confidential information to its employees, officers, consultants, or agents only to the extent that such disclosures are required to exercise its rights and perform its obligations under the agreement or attachments. Each party should take such steps as may be reasonably requested by the other or otherwise required to ensure that the aforementioned persons acknowledge and comply with the use and confidentiality associated with such information. Each party agrees to indemnify and hold the other party harmless against any loss or damage that may be caused to such other party because of disclosure of any information relating to the affairs of such other party or its constituents in violation of the provisions by such party, its employees, or its agents. All statistics related to the transaction and system performance should be treated as confidential and should remain under the custody of NPCI. However, members can have access to their own statistics and the same should not be disclosed to other members under V 2.1 Page 26 of 92

28 any circumstances. The members cannot make reference of these documents in any public announcement, unless permitted by NPCI in writing. These documents should not be replicated in any form without prior written permission of NPCI Intellectual property rights NPCI holds the intellectual property rights to all these documents, particularly those prepared for the NFS network Non-disclosure agreement All members participating in the NFS network should sign a non-disclosure agreement with NPCI. Each member should treat NFS related documents as strictly confidential and should not disclose these documents to other parties without prior written permission from NPCI. Failing to comply with this would invite penal actions. However, the participating members can disclose NFS-OSG to its employees or agents on a need-to-know basis Arbitration NPCI would endeavor to amicably resolve disputes or differences arising from the interpretation of this document. In case NPCI fails to resolve the issue, the process of arbitration would be followed and the resultant award would be binding on all concerned. NFS would continue to work with the party under the contract while the arbitration proceedings are in progress unless the matter is such that the work cannot possibly continue until decision from the arbitrator on the dispute. The venue of the arbitration would be Mumbai Indemnification It is binding on all members participating in the NFS network including NPCI to defend and indemnify themselves from all loss and liabilities if any, arising out of the following events: Member s failure to perform its duties and responsibilities as per NFS-OSG. Malfunctioning of the member s equipment. Fraud or negligence by a member. Unauthorized access to NFS network. Member s software, hardware, or any other equipment violating copyright and patent laws. Denial of transaction services covered under NFS-OSG when the member is acting as a card issuer. V 2.1 Page 27 of 92

29 3.20 Compliance with NFS-OSG All members should comply with NFS-OSG as published by NPCI. NPCI reserves the right to impose action on members violating NFS OSG including levy of penalties on members or by suspending or terminating end-to-end (host-to-host) connectivity for frequent violations of NFS-OSG Amendments NPCI shall issue an operating circular (OC) specifying the amendments in the NFS OSG. Members can respond to amendments within 15 working days from the issue of OC in case of any clarification Deviation In case of any deviation to amendment requested by member, such deviation should be submitted to NPCI within a stipulated time as mentioned in 3.21, accompanied by supporting documents pertaining to deviation. NPCI reserves the right to grant or deny the request after reviewing the deviations submitted by the respective members Certification In case a new member is willing to join the NFS network, NPCI would prepare a project plan for the particular member. The project plan will document all the requisite steps needed to be performed prior to establishing host-to-host connectivity between the existing members in the NFS network and NPCI before going live on the NFS network. The project plan will also list the responsibilities pertaining to the project management tasks. The applicable fee plus applicable taxes including service tax should be paid in advance by the member. Apart from this, the project plan will also document steps related to test and execution of the plan. The test plan will detail all the personnel involved in conducting the acceptance test. If a third party, on behalf of NPCI, develops software application or releases new version of the software, NPCI reserves the right to upgrade the existing system after appropriate certification. NPCI will provide notice of sixty days to all members prior to undertaking such enhancements on the NFS network. However, NPCI will examine whether it needs to proceed with re-certification. In case NPCI decides that re-certification is needed, all expenses relating to re-certification should be borne by the members. NPCI will retain all such software enhancements and new versions of software released. If a member develops software application or releases new version of a software, the member should notify NPCI at least sixty days in advance and should allow NPCI to perform re-certification. All cost associated with such re-certification will be borne by the respective member that has developed the software application or released the new version of the software. V 2.1 Page 28 of 92

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31 4.0 Operating procedure for issuer members This section defines the operating procedures of National Financial Switch (NFS) as applicable to the card-issuing members. 4.1 ATM and Cards (Debit, Credit, Proprietary, Pre-paid, etc.) In cases where the card-issuing members have tied up with NFS, they would need to define their own card base for acceptance of their card on the NFS network. NFS would be responsible for routing the transactions between the card-issuing members and the acquirer members based on the BIN updation request shared by issuing banks. BIN updation form is provided in Annexure-A. 4.2 Card standards The card issuing members should adhere strictly to the card standards provided in Annexure B, and to the prevailing standards of the International Organisation for Standardisation (ISO). 4.3 Personal Identification Number The card-issuing members should allocate personal identification numbers (PINs) to each customer. Further, they should not retain the PIN in the form of a clear text message under any circumstances. All PINs should be encrypted in keeping with the prevailing encryption standards and should be between four (4) and twelve (12) digits. 4.4 Designated primary account number In case a customer has more than one bank account, the card-issuing member should designate one of the accounts as the primary account against which all ATM transactions would be posted through NFS. 4.5 Card issuer system requirements The card-issuing members should be reasonably equipped to provide secure services to their customers. 4.6 Requirement of authorization system Every member should maintain a Card Authorization System (CAS) that should comply with the performance standards as stated in the subsequent sections. V 2.1 Page 30 of 92

32 4.7 Transaction service The card-issuing members should support the following ATM services: Figure 6: Types of ATM services Transactions live in NFS Cash Withdrawal Balance Inquiry PIN Change Mini Statement Card to Card Funds Transfer Statement Request Cheque book Request Mobile Banking Registration Aadhaar Seeding Proposed Cash Deposit The NFS team continuously strives to introduce new services on the network. Additional services are approved by NFS Steering Committee. 4.8 Performance Successful Transaction Successful (or approved) transactions are those, which have resulted in the customer availing the desired service at the ATM and are processed with response code (RC) 00, 26 or 71 (Deemed approved). V 2.1 Page 31 of 92

33 Following figure 7 explains the basic transaction flow. Figure 7: Transaction flow Core Banking Denied Transaction Denied transaction is an unsuccessful (or declined) transaction in which the customer has not been able to avail the desired service at the ATM because of the transaction declining due to business or technical reasons. These are processed with response code (RC) other than 00, 26 or Response Time All ATM switch systems installed or operated by the respective card-issuing members should respond to the Request Message from NFS within twenty (20) seconds. Failing to comply with such a request would result in a denial message to the ATM acquirer member. V 2.1 Page 32 of 92

34 4.8.4 Accuracy All card-issuing members would be responsible for the content, completeness, and accuracy of all transaction messages entering the NFS network Failure to perform In case, any member fails to comply with the performance criteria listed in Clause 4.8, they would be liable to be penalized as per clause 3.6 of the NFS-OSG. 4.9 BIN table maintenance - Issuer The BIN table maintenance comprises the following: The card issuer member should provide details of Bank Identification Number (BIN) to NFS. On receiving the BIN, NFS will update the BIN table within five (05) working days on its production system. The acquiring members shall update the BIN in their BIN table / system within five (05) working days from the date of receiving the information from NFS and would use this BIN table to route transactions through NFS to the card issuing member. V 2.1 Page 33 of 92

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36 5.0 Operating procedure for acquirer members This section specifically defines the operating procedures of NFS pertaining to the acquiring members. The acquirer members would be responsible for providing and managing their ATM network, which in turn would allow customers of other members, access to their ATM network. 5.1 ATM services This section deals with the services offered on NFS network for all the members joining the NFS network. Cash withdrawal Cash withdrawal is a transaction performed at an ATM, which dispenses cash to the customer upon request. Members should provide the customer with any one of the following options to obtain a receipt upon request or to allow the customer to decline a request for receipt. The receipt should indicate details of the entire transaction. In case the ATM fails to generate the receipt automatically, the ATM screen should display the details of the transaction. In case the ATM fails to dispense the amount of cash requested by the customer, appropriate messages must be sent to the issuer through NFS so that the customer is debited only for the amount dispensed and not the amount requested and authorized. In case the ATM malfunctions, the members should take every remedial step to provide appropriate reversal messages to the issuer through NFS. Balance inquiry Balance inquiry is a statement that displays a customer s actual/available funds on the ATM screen. In addition, the customer could get a printed receipt of the account balance. Following are the value added services offered on the NFS network: Pin Change Mini Statement Card-to-Card Fund Transfer Chequebook Request Statement Request Aadhaar number seeding Mobile banking registration V 2.1 Page 35 of 92

37 A brief description of all above mentioned value added services is given below: : Pin Change Allows cardholders to change their PIN on NFS network ATMs Mini Statement Allows cardholders to generate their account's mini statement on NFS network ATMs Card-to-Card Fund Transfer Allows cardholders to transfer funds from their account to any other account through NFS network ATMs Cheque book Request Allows cardholders to place a request for a Cheque Book through NFS network ATMs Statement Request Allows cardholders to place a request for Statement of Account through NFS network ATMs Aadhaar number seeding Allows cardholders to seed their Aadhaar number in their bank account Mobile Banking Registration Figure 8: Value added services Allows cardholders to register for mobile banking with their bank if mobile number is already updated 5.2 ATM base The acquirer member should ensure the participation of all the ATMs on the NFS network, whether operated by them or by their sponsored members. ATMs owned and operated by sponsored members should adhere to the NFS-OSG. 5.3 ATM standards All ATMs participating in the NFS network should comply with the extant industry standards to provide better quality of service to the customers through NFS and other guidelines issued by RBI and IBA from time to time. V 2.1 Page 36 of 92

38 5.3.1 Receipt requirement The acquirer members should ensure that all ATMs would provide a transaction receipt to the customer on request. In case of malfunctioning of the ATM or the ATM running out of paper, the customer should be provided with the option of further continuing with the transaction or terminating it. The following details should be displayed on the customer s transaction receipt. While this is an indicative list, the acquirer member may subsequently add other details pertaining to the receipt requirements such as: Date, time, and transaction number ATM identification (ID) number ATM location Cardholder s account number(masked) Withdrawal amount Available balance Response code Dispensing capability All ATMs should be capable of dispensing INR currency notes preferably of the denominations of 100, 500 and 1, Partial dispensation of cash by ATM (DE#4 < DE#95) Members should follow the guidelines provided below to prevent the impact of partial dispensation of cash by the ATM on the settlement: If the requested amount (DE#4) is lower than the replacement (dispensed) amount (DE#95), the transaction is settled for the replaced (dispensed) amount as per DE#95 during NFS Settlement. NPCI will communicate such transactions to the acquiring member within two working days from the next date of the transaction for future course of action by the acquiring member. On receiving the communication with respect to such transactions, the acquiring members should raise credit adjustments immediately or ensure that such transactions are honored on receipt of dispute from the issuing members. In online message, if the requested amount (DE#4) is lower than the replacement (dispensed) amount (DE#95), Issuing Bank should not process the reversal online and it should be handled manually. Rectification of such exceptional transaction should be handled through Dispute Management System (DMS). V 2.1 Page 37 of 92

39 5.3.4 Cash retraction It is obligatory for acquirer members to ensure that in each of its ATMs, the cash retraction facility is disabled. This is a mandatory guideline issued by the regulator. Members should also comply with the following guidelines with respect to disabling cash retraction facility: Educate the customer on the consequences of cash retraction and the reasons for disabling the facility, as customer awareness is very crucial to bring about discipline in collecting the cash ejected. Display information regarding disabling cash retraction at all ATM locations and ensure wide propagation. The message may be flashed on the ATM before conducting the transaction. Ensure that new ATMs being installed do not provide cash retraction features Capability to read data from tracks All ATMs should be able to read the data on Track II of the magnetic strip present on the customer s card and transmit the same to NFS Acquiring members trademark All acquirer members on the NFS network should use their brand names/trademark and any other information on their ATMs to help the customer distinguish the bank running the ATM operation. The acquirer members must comply with the advertising rules given in clause 3.14, if they display the NFS logo/trademark on their ATMs Captured cards Under no circumstances should the ATMs participating in the NFS network capture the cards, unless specifically informed by NFS or legally required to do so. However, this is not applicable in case of ATM malfunctioning or cards left in the ATM machine by the customer after the transaction is completed. The following points describe the approach that members need to adopt with respect to captured cards in case of ATM malfunctioning or cards left in the ATM by the customer after the transaction is completed: The acquiring member should not send the captured card to the issuing member. The captured card should be properly accounted for by the acquiring member and destroyed by cutting across the magnetic stripe vertically. As a best practice, the particulars including the reason for card capture should be communicated by Acquiring member to the Issuing Bank. V 2.1 Page 38 of 92

40 The customer should be advised through receipt or message on the screen to contact the issuing member bank to report card captured by the ATMs. The issuing member, upon receiving information on card capture, should block the card and arrange to issue fresh card at the earliest. 5.4 Acquirer members requirements Acceptance of cards The acquiring members should treat all cards as equal and should ensure that these cards are accepted at all ATMs participating in the NFS network BIN table maintenance - Acquirer The BIN table maintenance comprises the following: The acquiring members should update the BIN in their BIN table / system within five (05) working days from the date of receiving the information from NFS. The information of BINs updated in NFS is made available in DMS, Acquirers can download the BIN details from DMS and confirm once it is updated in their system. The acquiring member would use this BIN table to route transactions through NFS to the card issuing member ATM operation requirements All acquiring members participating in the NFS network mandatorily need to meet the minimum performance standards listed in clause 5.5 for all its ATMs. 5.5 Performance ATM time-outs The ATM should wait for forty-five (45) seconds to receive responses to the requests through NFS before declining a transaction. It is advised that the time out sessions should be enabled for all screens / stages of ATM transaction keeping in view the time required for such functions in normal course. Bank may ensure that no time extensions are allowed beyond a reasonable limit at any stage of the transaction. It is also advised that the cardholder is prompted to enter the PIN as the last step of the transaction Accuracy The acquiring member is responsible for the content, completeness, and accuracy of all transaction messages that enter NFS. V 2.1 Page 39 of 92

41 5.5.3 Failure to perform In case an acquiring member does not comply with the performance criteria listed in clause 5.5, it would be suspended from participating in the NFS network and/or penalty would be levied. 5.6 ATM information Standards for correct identification of ATM locations Members are required to send correct ATM locations details in DE#43 & DE#61 in online message as given below: (Reference OC 69). 1. DE # 43 should include Table 4: ATM location details to be sent in DE # 43 Position Length Field Name Description Terminal Address ATM Address along with Taluka name as allocated by General Post Office (GPO) Terminal city District Name should be populated as allocated by GPO Terminal State State code Terminal country Country code should be provided as per ISO standards. IN for domestic transactions. 2. Pin code should be populated in DE 61 (subfield Zip code) along with some other information Location Members are required to submit complete location details of ATMs deployed by them in a specified format. (Reference OC 165). V 2.1 Page 40 of 92

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43 6.0 Introduction of sub-members in the NFS network NPCI facilitates participation of the sub-members in the NFS network (NPCINET) subject to satisfaction of the following pre-membership criteria listed for sub-members: The sub-members would participate in the NFS network through their sponsor bank, which is a direct member of the NFS. The sponsor bank should have a valid banking license issued by the RBI. The Application Service Provider (ASP) or sponsor banks acting as ASP would be responsible for sending/receiving the transactions/messages in lieu of their sub-members. The sponsor banks should use the ISO 8583 messaging system for all ATM related transactions. As part of the financial inclusion drive, there are no sponsorship restrictions for sponsor banks pertaining to the number of sub-members they can sponsor. Sponsor banks have to take care of the material aspects relating to operational feasibility, risk mitigation, fund settlement, and collaterals before sponsoring any sub-members to the NFS network. However, sub-members have to adhere to all these factors through their sponsor bank as a compliance mandate while submitting an application for joining the NFS network. The settlement of transactions by sub-members would take place in the settlement accounts of the sponsor banks maintained at RBI. Under this arrangement, sponsor banks will assume complete responsibility for the settlement of all transactions by sub-members. Sub-members must adhere to minimum technical standards while setting up ATMs. Further, they must upgrade their existing ATMs to avoid setbacks to the payments infrastructure. Some of the technical aspects they would need to adhere to include: Use of HSM (External Host Security Module) for encryption and decryption. FIPS 140-1/140-2 or FIPS 197 certified crypto product (HSM Standard). Pin Generation and verification using HSM. ATMs and POS having a unique key per terminal. Use of double length triple description keys for terminals and translations. Mandatory PIN, CVV1, and expiry date verification by issuers. Reconciliation software for reconciliation and handling ATM disputes. The sponsor bank should bring the following to the immediate notice of NPCI: Any of its sub-members violating laws pertaining to Anti-Money Laundering (AML) as defined and articulated under the Prevention of Money laundering Act (PMLA) Any violation of regulation as issued by the Financial Intelligence Unit, Government of India, and the Reserve Bank of India in connection to KYC/AML/CFT. Any involvement of its sub-members in any suspicious transactions and frauds. Any of its sub-members resorting to any unfair practices relating to their participation in the NFS network. V 2.1 Page 42 of 92

44 Any of its sub-members not adhering to the rules, regulations, operational requirements, and instructions of the NFS network. Any suit filed in any court of law or arbitration where a sub-member and NPCI have been made parties. Any fine and/or penalty imposed by a regulator. The sponsor bank should inform NPCI in case of cessation of the sponsorship arrangement between the sponsor bank and its sub-members with a prior notice of at least three months through necessary communication channels that are deemed appropriate as per the compliance mandate. The sponsor bank will be liable for all compliance by sub-members for all the guidelines issued by NPCI, RBI, GoI, and all other relevant regulatory authorities. V 2.1 Page 43 of 92

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46 7.0 Operating procedure for settlement agency NPCI would act as a clearing and settlement agency for settlement of inter-bank transactions between the issuing and the acquiring members participating in the NFS network. RBI has accorded Type-D membership of the RTGS System to NPCI, permitting NPCI to process settlement instructions through NPCI s RTGS gateway. Figure 9: NPCI as a clearing and settlement agency for inter-bank transactions between issuing and acquiring member: NPCI Network RBI accorded Type-D Membership of RTGS system to process settlement transactions through NPCI s RTGS Gateway NPCI - Clearing and Settlement Agent Issuing Members Inter-bank transactions Acquiring Members NPCI Network V 2.1 Page 45 of 92

47 7.1 Role of NPCI as settlement agency For the required funds, NPCI will submit member-wise net settlement obligations through RBIs settlement system to be applied in the settlement account or current account of the members that are maintained with RBI. NPCI will prepare the summary level data of NFS settlements daily before the start of business hours for clearing and settlement. Daily settlement instructions will be executed through the NPCI RTGS system. NPCI would defend, indemnify, and save all members participating in the NFS network from and against all claims, losses, costs, expenses, or damages caused by wilful or grossly neglected acts or omissions of NPCI as a settlement agency. V 2.1 Page 46 of 92

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49 8.0 Settlement procedure 8.1 Settlement mechanism This section outlines the procedures for settlement, a process by which NPCI, as the settlement agency, would credit/debit from the members settlement account maintained with RBI, the amount as per the summary level data it receives from NFS. Before participating in the NFS network, all members should issue a letter of authority to RBI (DAD Mumbai), authorizing the settlement agency (NPCI) to credit and debit their settlement account with RBI. NFS calculates the net debit/credit position based on the total acquiring and issuing transactions for a particular member. This process is explained under netting. In case of net debit, the member has an obligation towards other members. Thus, it owes the amount equal to the net settlement amount to other members in the network. During the settlement process, NPCI debits the members, which is under net debit and credits the members under net credit. To effect this, the net debit member should hold sufficient funds in its settlement account. Settlement account is the RTGS account of members with RBI. In case the settlement account does not possess adequate funds, the net debit member would fail to fulfil its obligations, leading to a cascading effect on other members positions, further leading to collapse of the whole system. The settlement is governed under the Settlement Guarantee Mechanism communicated by NPCI from time to time. 8.2 Settlement reporting and reconciliation All members participating in the NFS network would receive the following reports to enable them to perform reconciliation: Raw data file Acquirer Issuer Net Settlement report (NTSL) Settlement file (STL) Acquirer settlement file Issuer settlement file Verification reports Acquirer Issuer Verification Reversal report V 2.1 Page 48 of 92

50 Figure 10: Settlement Reporting Process NFS sends issuer and acquirer activity report to all its members Member Member Member Member Member Member Members Member Member Member Member Member Member Member Member Member Member Member The settlement will be done based on the NTSL file shared by NFS. This NTSL file would contain the net position of the member. Settlement reconciliation is a process where all members verify the accuracy of these transactions as listed in the settlement report. It is the responsibility of the members to reconcile all transactions taking place through NFS on their card base at other members ATMs and vice versa Daily settlement reports NPCI would upload the following daily settlement reports in DMS Server: Table 5: Daily settlement reports uploaded by NPCI in the DMS Server File name* Description Format Frequency Encryption NFSRawdataXXX zip NFSStlXXX zip VerafandVerifXXX zip NTSLXXX XLS VerifReversalTransXXX xls This file contains Issuer and Acquirer transaction details for a settlement day This file contains transaction details and summary of transaction count and amount for a settlement day This file contains reversal transactions generated after cut off This file contains settlement summary, adjustment details, interchange fee, service tax, NPCI Switching fee,penalty, customer compensation amount and final settlement amount This file contains reversal generated after cut off and settled on next settlement day Text file Text file Text file * In file name, XXX represents the respective member s three-digit code implying that it contains the respective member s transactions as an Issuer and Acquirer. Daily Daily Daily Zip file protected with password Zip file protected with password Zip file protected with password xls file Daily No encryption xls file Daily No encryption V 2.1 Page 49 of 92

51 Members can download their respective Daily Settlement Reports by accessing the DMS Server. The NTSL file will be uploaded in DMS only on working days. On a holiday, the NTSL file will be available on the next working day. This report (NTSL/DSR) will indicate the net settlement position for each of the members along with their sub members. The net settlement amount may be a debit or a credit. If the net settlement position is a debit amount, it indicates that members issuing transactions are more than its acquiring transactions and vice versa. The net settlement amount would include transaction amount, net dispute/adjustment amount, late reversals, interchange fees, penalties, customer compensation amount, service tax, and switching fees. NPCI, as a settlement agency will effect the necessary credits and debits to the members settlement account with RBI Raw data files On a daily basis, NFS shares with its members through DMS, the raw data file in a password protected zip format containing Issuing and Acquiring files, which are used by the members for reconciliation. Issuer raw data file This file contains a list of all transactions done by customers of one member at other member s ATMs during the previous settlement period (from 23:00 Hrs. on the previous night to 23:00 Hrs. of the night before). For the purpose of reconciliation, the Issuer member will compare the transactions available in Issuer raw data file with the report generated by its own switch/core banking system. If any differences are identified during reconciliation, it should be addressed by Issuing bank through dispute and exception handling process at their end. The sample issuer raw data file is provided in Annexure-C. Acquirer raw data file This file contains a list of all transactions done at a member s ATM by customers of other members during the previous settlement period (from 23:00 Hrs. on the previous night to 23:00 Hrs. of the night before). For the purpose of reconciliation, the Acquirer member will compare the transactions available in Acquirer raw data file with the report generated by its own switch/ej files. If any differences are identified during reconciliation, it should be addressed by Acquiring Bank through a Debit/Credit Adjustment and by providing electronic journal (EJ) / journal print (JP) and other requisite documents (if necessary). The sample Acquirer raw data file is provided in Annexure-D Settlement (STL) files On a daily basis, NFS shares with its members, the STL file through DMS in a password protected zip format containing Issuer and Acquirer files. V 2.1 Page 50 of 92

52 Issuer STL File This file contains a list of all transactions done by customers of one member at other members ATMs during the previous settlement period (from 23:00 Hrs. on the previous night to 23:00 Hrs. of the night before) along with the transaction summary for the day. The sample issuer STL file is provided in Annexure-E. Acquirer STL file This file contains a list of all transactions done by customers of other members at its ATMs during the previous settlement period (from 23:00 Hrs. on the previous night to 23:00 Hrs. of the night before) along with the transaction summary for the day. The sample acquirer file is provided in Annexure-F NTSL files On the settlement date, NPCI makes available to its members through DMS, the NTSL file containing summary of transactions, disputes/adjustments, penalties, customer compensation amount, interchange, service tax, and switching fees. Members use these files for settlement and accounting purposes. The sample daily settlement report (NTSL / DSR) is provided in Annexure-G Verification Issuer File (VERIF files) and Verification Acquirer File (VERAF) On a daily basis, NFS shares with its members verification files (VERIF and VERAF files) through DMS in a password protected zip format. These files contain reversal transactions generated after cut off and those reversals, which has been received by NPCI without original transactions. The sample issuer and acquirer verification file is provided in Annexure-H & Annexure-I Verification Reversal Report On a daily basis, NFS shares with its members, verification reversal report through DMS. This report contains details of reversals received from Acquirer by NPCI after cut off (late reversals) and settled in the next day s settlement. The sample verification reversal report is provided in Annexure-J. 8.3 Network cutover time Currently, the NFS network cutover time is 23:00 hours. NPCI reserves the right to amend the NFS network cutover time. 8.4 Exception handling Exception transactions are those which remains unreconciled and/or are reported by a customer as erroneous. Members should collaboratively endeavour to settle such discrepancies, if raised by V 2.1 Page 51 of 92

53 other member/s. All such discrepancies should be resolved amicably as per the Dispute Resolution Mechanism, section 9.3 laid down in this document. 8.5 Settlement currency All transactions on the NFS network would be settled in Indian Rupee (INR) only. 8.6 Holiday settlement Settlement entries shall not be posted in RTGS Settlement account of members maintained with RBI on Sundays, RTGS Holidays published by RBI and on second & fourth Saturdays. For Sundays, RTGS Holidays and on second & fourth Saturdays, the settlement shall be done on next working day. 8.7 Settlement basis NPCI will carry out all settlement pertaining to NFS transaction on T+1 basis for domestic transactions and as per the defined timeline (TAT) for international transactions. However, the settlement with respect to exception transactions would be carried out within three working days following the date of receipt of claim by NFS. 8.8 Settlement confirmation The settlement executed by NPCI on its RTGS gateway to RBI would be deemed as the final net settlement for NFS transactions carried out by NPCI. 8.9 Process for handling transactions not settled due to data loss NPCI has state of art infrastructure to operate the National Financial Switch (NFS) 24x7 with near zero downtime and zero tolerance to data loss. However, as an efficient system it is necessary to have a process to handle transactions not settled in case of loss of data due to disaster. If any unforeseen event that impacts NPCI s system resulting in loss of online transactions data and if the data is non-recoverable by NPCI system, members will have to settle the transactions between themselves. NPCI shall facilitate settlement of such transactions between members. Settlement of funds between members will be necessary when the transactions are routed through NFS, authorized by Issuers and serviced by Acquirers and has not been settled by NPCI due to loss of data of online transactions. Settlement of funds for data lost will not be applicable under the following circumstances: a. NPCI has not received authorization from Issuer. b. Authorization received from Issuer is not sent to Acquirer by NPCI. c. Acquirer has not serviced the request after receiving authorization from Issuer through NPCI. Such cases will be considered as technical declines and treated as in the normal scenario. V 2.1 Page 52 of 92

54 8.9.1 Process to be followed by NPCI: NPCI shall keep the members informed on the date and time period when such situation of force majeure has occurred and resulted in loss of data of online transaction. The members, upon receiving intimation from NPCI, will focus on reconciling the transactions done during that period and identify the transactions not settled by NPCI. Since records of these transactions would not be available with NPCI, the settlement for such transactions will not be done by NPCI. NPCI shall facilitate settlement of such transactions between members Process to be followed by Members: Members as an Issuer and Acquirer should focus and reconcile the transactions done on NFS network during such period and identify the transactions not settled by NPCI. Members should settle such identified transactions between themselves, which are not settled by NPCI due to loss of data. As an Acquirer: Acquirer should reconcile the transactions and identify successful transactions at their end during the reported disaster period, which are not settled. Acquirer should share the list of such successful transactions not settled by NPCI along with the switch logs, EJ/JP and other supporting documents required to confirm the status of the transaction as successful with all relevant Issuers as well as with NPCI. As an Issuer: Issuers should reconcile the transactions and identify those transactions, which are debited to customer s account during the reported disaster period but not settled. Issuer should not reverse such transactions to customer s account during reconciliation or on receipt of complaint without referring it to Acquirer for checking the status of the transaction. Only those transactions confirmed by Acquirer s as failed should be reversed to the customer s account. Acquirer shall share with Issuer the list of such successful transactions not settled by NPCI along with the switch logs, EJ/JP and other supporting documents required to confirm the status of the transaction as successful. Issuer should check the switch logs, EJ/JP and other supporting documents and satisfy themselves about the status of the transaction. Issuer should pay the amount equal to the successful transactions not settled by NPCI. Issuer shall not be able to raise chargeback (dispute) for such transactions, as those records shall not be available with NPCI. V 2.1 Page 53 of 92

55 8.10 NPCI s Contact Information Table 6: Key contact details Name Company Division Phone No Address Mr. Abhay Parekh NPCI Sr. Manager, Operations abhay.parekh@npci.org.in Mr. Gururaj Rao NPCI AVP, Operations gururaj.rao@npci.org.in Mr. Ram Sundaresan NPCI Head, NFS ram.sundaresan@npci.org.in NFS DMS Help Desk (DMS, Settlement, Reconciliation, and Reporting) Table 7: NFS DMS Help Desk Phone number /8651/8652/8657/8660 Support hours contact to hrs. (Monday to Saturday) except public holidays and on second and fourth Saturday nfsdms@npci.org.in V 2.1 Page 54 of 92

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57 9.0 Administrative Policies and Procedures 9.1 Authority of NPCI NPCI would act as the final authority within the NFS network on all matters related to policies and procedures. 9.2 Responsibilities in dispute resolution Following points explain the responsibilities of members in dispute resolution: It is obligatory on the part of individual members to resolve all disputes amicably, which pertain to customers transactions, within the stipulated time as decided by NPCI. The dispute, error, and fraud either to NPCI or to any other member (as directed) who is party to the dispute for the purpose of scrutiny, must follow the procedure and timelines laid down in this document. Interpretation, scrutiny, and resolution of disputes must happen within the ambit of rules, regulations, operations, and procedural guidelines relating to the NFS network, instructions and operating circulars issued by NPCI, and instructions and directions issued by the RBI from time to time. However, the use of the Dispute Resolution Mechanism will not be resorted to by members to deal with aspects relating to acts of customer that are prima-facie fraudulent in nature, are internal to the member s operations, or outside NFS system. 9.3 Dispute Resolution Mechanism Exception transactions are those that are not reconciled and/or are disputed by the customer/members. Members should collaboratively endeavour to settle discrepancies in the settlement process, if raised by other members. All such discrepancies should be resolved amicably as per the NFS-OSG. The timeline (TAT) provided in this document for each of the disputes/adjustments is subject to change. Any change in TAT would be communicated to NFS members through operating circulars. Following are the procedures of handling disputes in the NFS network: NFS maintains a database for all transactions done by its members in Dispute Management System (DMS). DMS validates and processes disputes only pertaining to valid/approved (including deemed approved) transactions. V 2.1 Page 56 of 92

58 Dispute/Adjustments can be raised through appropriate menu options provided in DMS by authorised users. The dispute/adjustment can be raised by retrieving the transactions on the basis of transaction date and Card no. or RRN. Disputes like Chargeback, Credit/Debit adjustments, Chargeback representment/acceptance etc. can also be raised through bulk file upload option provided in DMS. Bulk upload file should be in a specified Comma Separated Value (CSV) format. Refer Annexure-K for the bulk upload format. Disputes can be rejected due to the following reasons: Wrong transaction details (Card No/RRN/Transaction Date). NFS dispute resolution time limit has lapsed. Lodging of duplicate disputes - DMS maintains a database of all disputed transactions raised by members and thus, any dispute that matches the existing records is not processed. Using of wrong file format while uploading bulk adjustments Stage I - Chargebacks Issuer members should resolve and settle all disputes pertaining to the customers transactions arising out of errors. Issuer member can initiate a chargeback when its customer raises a complaint of non-receipt of the cash (fully or partially) from the Acquirer member s ATM, while the customer s account has already been debited. The chargeback can be raised in Dispute Management System (DMS) provided by NPCI, within 60 days from the next day of the transaction. Single dispute multiple transaction: Where customer has done multiple cash withdrawal transactions on a particular ATM in a day and has not received cash (full or partial), for one or more transactions from the total number of transactions done at the ATM, but not all the transactions, the chargeback needs to be raised with reason code Single dispute multiple transactions. The total chargeback amount should be equal to the complaint amount for such cases. Providing dispute letter is mandatory, in case dispute letter is not provided, it shall be presumed that customer is disputing only the transaction for which chargeback has been raised. (Reference OC.151) Documents to be submitted by Issuer at chargeback stage: a) For multiple chargebacks cases, chargeback should be raised with reason code Single Dispute Multiple Transactions and Dispute Letter needs to be uploaded in DMS while raising chargeback as per OC 109/113. b) Request for CCTV footage, if asked by the customer (Reference OC 83). V 2.1 Page 57 of 92

59 Chargeback for card-to-card fund transfer transaction: For card-to-card fund transfer transactions, remitter initiates the transaction through the ATM and the amount is directly credited to the beneficiary account. Remitter can raise a chargeback for settled transactions where remitter customer account is debited, but beneficiary customer account is not credited, within 60 days from the next day of the transaction. On raising a chargeback through DMS, remitter (issuer) will get credit for the transaction amount and beneficiary will be debited. However, the interchange fee will not be reversed and it will be retained by the Acquiring member. For all chargebacks raised by Issuer/Remitter after 17 days from the transaction date a fee of 25 plus applicable taxes including service tax is levied on Acquirer/Beneficiary. The fee of 25 plus applicable taxes including service tax is reversed, in case if the chargeback is represented by the Acquirer/Beneficiary. This will be applicable for complete dispute cycle upto arbitration. (Refer Annexure-L for the action taken in DMS) Stage II - Representment Acquirer members can represent the chargeback raised by the issuing bank within 6 calendar days from the next day of chargeback along with scanned copies of valid Journal Print (JP) or Electronic Journal (EJ) into the DMS system for successful cash withdrawal transaction. Representment cannot be processed if chargeback is already accepted or the TAT for processing representment is expired (chargeback shall be deemed accepted). Documents to be submitted by Acquirer at representment stage: a) Copy of EJ/JP log of the disputed transaction along with 3 preceding and 3 succeeding successful cash withdrawal transactions. b) Covering letter: If the Acquirer is providing a copy of Journal Print (JP) wherein there are many intermediate nonfinancial transactions between 3 preceding and 3 succeeding successful cash withdrawal transactions, in such a case, if the Acquirer is providing only 3 preceding and 3 succeeding successful cash withdrawal transactions, they should provide a covering letter containing details of the intermediate non-financial/missing transactions. The format of covering letter is provided in Annexure-M for reference. V 2.1 Page 58 of 92

60 Compliance: - If Acquirer does not submit the copy of EJ/JP while representing the chargeback but provides some other document. OR - If the copy of EJ/JP is not of the disputed transaction and is of some other transaction. then, Issuer should raise pre-arbitration and also send to NPCI officials reporting noncompliance by Acquirer. NPCI will take up the matter with frequent non-compliant Acquirer for ensuring compliance for future while addressing disputes. Representment for chargeback raised on card to card fund transfer transactions: In case of card-to-card fund transfer transactions, beneficiary member can represent the chargeback within 6 calendar days from the next day of chargeback. Beneficiary has to provide the declaration / proof of customer account credited for the fund transfer amount. Representment cannot be processed if chargeback is already accepted or the TAT for processing representment is expired (chargeback shall be deemed accepted). (Refer Annexure-L for the action taken in DMS) Stage III - Pre-Arbitration If the Issuer and Acquirer members are unable to settle the dispute, Issuer can raise prearbitration on the represented chargeback through the DMS. Issuer bank is given the facility of raising pre-arbitration if proper proof of dispensing of cash is not provided in form of EJ/JP by the Acquirer while representing a chargeback for cash withdrawal transaction or proof of credit is not provided by beneficiary for card to card fund transfer transaction. For all cases of pre-arbitration including pre-arbitration of debit adjustment disputes, the timeframe for raising pre-arbitration is within 30 days from the next day of re-presentment date. Acquirer / Beneficiary bank has to respond (Accept or Reject) the pre-arbitration raised by Issuer bank within 17 days from the next day of pre-arbitration date. If the pre-arbitration is not accepted or rejected within the timeframe, it would be considered as deemed accepted by Acquirer / Beneficiary. Fee of 100 plus applicable taxes including service tax for discrepancy in EJ/documents is collected from the Acquirer/Beneficiary for Pre-arbitration raised by the Issuer/Remitter. The fee of 100 plus applicable taxes including service tax is reversed, in case if the pre-arbitration is rejected by the Acquirer/Beneficiary. This will be applicable at the stage of arbitration also, if case is referred to arbitration. V 2.1 Page 59 of 92

61 Application of customer compensation for delayed credit DMS will calculate customer compensation amount for delayed credit for ATM cash withdrawal disputes in accordance with the directives issued by RBI through their circular no.dpss.pd.no.2632/ / dated May 27, Customers, through their Issuer member are eligible to receive the compensation 100/day, provided the chargeback is raised within 30 days from the date of transaction. The compensation would be calculated by DMS, after expiry of 6 days from the date of chargeback till the date of pre-arbitration/arbitration acceptance by the Acquirer member or decision by PRD in favour of Issuer (Reference OC 156). However, compensation would not be applicable for chargebacks which are represented and for pre-arbitration rejection cases. It will not be applicable for card to card fund transfer transactions. Documents to be submitted by Issuer while raising pre-arbitration: Any information that Issuing Bank wants to submit to the Acquirer while raising pre-arbitration. Documents to be submitted by Acquirer while rejecting pre-arbitration: Mandatory Documents a) Copy of EJ/JP log of the disputed transaction along with 3 preceding and 3 succeeding successful cash withdrawal transactions. b) Covering letter as per Annexure-M. c) Copy of Switch log of the disputed transaction along with 8 to 10 preceding and succeeding transactions in sequential order. Additional documents in support of the claim d) Cash certificate certifying overage, shortage or tallied position at the time of ATM EOD (related to the date of dispute). The format of cash certificate is provided in Annexure-N for reference. e) Cash verification/cash balancing report relating to the date of dispute i.e. from previous ATM EOD to the next ATM EOD. f) CCTV footage. In case of unavailability of CCTV footage, a proper reason should be provided by the Acquirer. The additional documents to be submitted by acquirer is not mandatory at the pre-arbitration stage. However, Acquirer shall endeavour to provide the additional documents while rejecting pre-arbitration wherever possible in support of their claim and for resolution of the dispute. (Refer Annexure-L for the action taken in DMS). V 2.1 Page 60 of 92

62 9.3.4 Stage IV - Arbitration If the customer is not satisfied by the evidences / documents provided by the Acquirer/Beneficiary at the time of Representment and while rejecting the Pre-Arbitration, Issuer/Remitter may refer the dispute to arbitration through DMS. The timeframe for referring a dispute to arbitration is 30 days from the date of pre-arbitration rejection. Arbitration dispute raising is a non-financial stage and will not have any impact in daily settlement. In the event of Arbitration dispute not being resolved amicably between the Issuer/Remitter and Acquirer/Beneficiary bank, the dispute will be referred to the Panel for Resolution of Dispute (PRD). Documents admissible as evidence for arbitration cases As an Issuer Issuer Submission Form. As an Acquirer Following documents need to be uploaded by Acquirer in DMS within 10 days from the next day of raising arbitration by the Issuer. Acquirers shall not be able to upload the documents in DMS for arbitration cases after the expiry of 10 days. All the documents uploaded in DMS at the time of representment, pre-arbitration rejection and for cases referred to arbitration shall be placed before PRD. a) Acquirer Submission Form. b) Copy of EJ/JP log of the disputed transaction along with 3 preceding and 3 succeeding successful cash withdrawal transactions. - If there are no successful preceding or succeeding cash withdrawal transaction within the ATM EOD, then copy of EJ/JP log for earlier or subsequent day (as the case may be) should be provided. c) A covering letter providing details of missing transactions in EJ/JP copy, if any. d) Copy of Switch log of the disputed transaction along with 8 to 10 preceding and succeeding transactions in sequential order (sorted on date and time for the ATM). If the disputed transaction is the first or last transaction of the day, then copy of switch log for earlier or subsequent day (as the case may be) should be provided. e) Cash certificate certifying overage, shortage or tallied position at the time of ATM EOD (related to the date of dispute). V 2.1 Page 61 of 92

63 f) Cash verification/cash balancing report relating to the date of dispute i.e. from previous ATM EOD to next ATM EOD. g) CCTV footage must be provided. For any reason of unavailability, proper clarification should be provided by the Acquirer. h) Clarification for any inconsistency/error messages in EJ/JP copy, switch log, etc. Note: i. If no documents are uploaded in DMS within 10 days for arbitration case as mentioned above, the documents already uploaded in DMS by Acquirer at the time of representment and rejection of pre-arbitration will be retrieved by NPCI and placed before PRD. ii. iii. iv. NPCI may seek clarification/additional documents that may assist the Panel to take an informed decision. All documents submitted by the Acquirer should be stamped and signed by Bank/WLAO official. Non-submission of complete set of documents may result in PRD decision going against the Acquirer on technical grounds. For multiple chargebacks cases, where chargeback is raised with reason code Single Dispute Multiple Transactions, EJ/JP copies of all the transactions mentioned in the Dispute Letter uploaded by Issuer while raising chargeback should be provided. (Reference OC 109/113). Withdrawal from Arbitration If the Issuer/Remitter bank is satisfied with the documents uploaded by Acquirer/Beneficiary bank in DMS, it may withdraw a dispute from arbitration. Acceptance of Arbitration Dispute If the Acquirer/Beneficiary bank wants to accept the dispute for any reason they can do so through the DMS. On acceptance, Acquirer/Beneficiary bank will be debited and credit will be afforded to Issuer/Remitter bank as mentioned below in the next settlement cycle: a. Dispute amount. b. Compensation of 100 per day for delayed resolution levied as per RBI circular DPSS.PD.No.2632/ / dated May 27, 2011 (If applicable). c. Interchange fee plus applicable taxes including service tax. V 2.1 Page 62 of 92

64 d. 100 penalty for EJ / document discrepancy plus applicable taxes including service tax. e. 25 plus applicable taxes including service tax in case chargeback is raised after 17 days from the transaction date. Arbitration Case Presentment In the event of arbitration dispute not resolved amicably between the Issuer/Remitter and Acquirer/Beneficiary bank, the dispute will be referred to PRD. NPCI will initiate the case presentment stage and once the dispute is selected for presentment to the Panel. Issuer/Remitter bank will be debited with the Arbitration processing fee of 500/- per dispute along with applicable taxes including service tax during settlement for all presentment cases. Arbitration Decision For decision in favour of Acquirer/Beneficiary Bank, there will not be any settlement for the disputed transaction. For decision in favour of Issuer/Remitter bank, Acquirer/Beneficiary bank will be debited and credit will be afforded to Issuer/Remitter Bank for the amount mentioned in the acceptance of arbitration case above. The processing fees of 500/- plus applicable taxes including service tax will be reimbursed to Issuer/Remitter bank by debiting Acquirer/Beneficiary bank. Panel for Resolution of Disputes PRD consists of five members as per RBI circular no. DPSS.CO.CHD.No.654/ / dated September 24, 2010 and RBI Approval letter DPSS.CO.AD.No.480 / / dated August 26, The PRD will have five members, four (4) from Direct Member Banks who are part of User Group with minimum of 50% from NFS Steering Committee members and the Chairman will be either the Chief Executive Officer or the Chief Operating Officer of NPCI. The CEO of NPCI may nominate an officer of NPCI not below the rank of Vice President to Chair the PRD meetings. In case of specific disputes involving system participants who are members of the PRD, the members concerned would be replaced by other system participants for the limited purpose of looking into the specific dispute. The place and timings of meeting of PRD would be communicated by NPCI along with the details of cases being presented to the Panel for resolution. Any party aggrieved by the decision of the PRD can approach the Appellate authority at RBI as per the above mentioned RBI Circular. V 2.1 Page 63 of 92

65 9.3.5 Debit /Credit adjustments Debit adjustments Debit Adjustments are raised by Acquirer members when cash is dispensed from its ATM but the transaction has not been settled, within 10 days from the next day of the transaction. While raising a debit adjustment, Acquirer members should upload scanned copies of Journal Print (JP) or Electronic Journal (EJ) as a proof of dispense of cash. The transaction should be a clear successful withdrawal as per EJ/JP. The copy of EJ/JP should contain the transaction for which the debit adjustment is raised along with three preceding and three succeeding successful cash withdrawal transactions into the DMS. Complete dispute cycle is available for transactions where debit adjustment is raised. Chargeback on debit adjustment can be raised upto 17 days from the next day of raising debit adjustment. For cases, where cardholders account does not have sufficient funds for recovery towards the debit adjustments raised by the Acquirer, the issuing bank can raise chargeback with reason Dr. Adj. Insufficient Funds and in such cases, Acquirer does not have the right to raise representment for such chargebacks. This will be considered as a declaration from the issuing bank that the cardholder does not have sufficient balance to recover the debit adjustment on that day. The issuing bank should attempt to recover the amount and arrange to credit the acquirer as and when recovered from the cardholder. The transfer of funds in such cases will be done by the members outside the system. Debit adjustment is not applicable for card to card fund transfer transactions. (Refer Annexure-L for the action taken in DMS). Credit adjustments Credit Adjustments are raised by Acquirer members where its ATM is unable to dispense the requested amount (fully /partially), but have received the transaction amount through settlement, within 60 days from the next day of transaction. This would help Issuer members in giving credit to their customers without raising a chargeback. Acquirer members should take appropriate measures to adjust the excess cash balance available at their ATMs, post reconciliation and process proactive credit adjustments for failed transactions. If a credit adjustment is raised on same day of raising chargeback, the chargeback will be cancelled and credit adjustment will be considered for settlement. For card to card fund transfer transactions, beneficiary bank should raise credit adjustment within 60 days from the next day of transaction which is settled in NFS, if it cannot credit customer account for any reason. (Refer Annexure-L for the action taken in DMS). V 2.1 Page 64 of 92

66 9.3.6 Good faith NFS members should resolve dispute within the time limit as prescribed in the NFS-OSG for disputes relating to chargeback, representment debit adjustment, and Chargeback and representment on debit adjustment. If members fail to raise the dispute/adjustment within the prescribed time limit, the same can be initiated on Good faith basis through DMS. Recourse to pre-arbitration/arbitration would not be available for disputes raised as Good faith in DMS. The documents / supporting to be provided for Good-faith shall be same as required to be submitted during chargeback, representment and debit adjustments. (Refer Annexure-L for the action taken in DMS). 9.4 Records NFS would preserve all records related to disputes/adjustments and can refer to them as and when required. 9.5 Termination/suspension of NFS membership Criteria for termination/suspension of NFS membership NFS may terminate/suspend membership under the following circumstances: The member has failed to comply with or has violated any of the provisions of the NFS-OSG as amended from time to-time. The member commits a material breach of NFS-OSG, which remains un-remedied for thirty days after providing a notice. The member s current account with the RBI is closed or frozen. The member is amalgamated or merged with another member. Steps have been initiated for winding up the business of the member. Suspension or cancellation of RTGS membership Process of NFS membership termination/suspension NFS would inform in writing to the member regarding termination/suspension of its membership to the NFS network. If NFS is of the opinion that the breach is not curable, NFS may suspend/terminate the membership with immediate effect. However, the member would be given an opportunity to be heard within thirty days before confirming or revoking the termination/suspension passed on earlier. V 2.1 Page 65 of 92

67 If NFS is satisfied, it may at any time, either on its own volition or on representation of the member that the order of suspension/termination of its membership should be revoked, may take action accordingly. If the breach is capable of remedy but cannot be reasonably cured within thirty days, termination/suspension will not be effective if the member in default commences cure of the breach within thirty days and thereafter, diligently pursues such cure until completion within sixty days of such notice of breach. The member whose termination of membership has been revoked would be entitled to apply for membership afresh in accordance with NFS-OSG Prohibition to use NFS logo/trademark Upon termination from the NFS network, the member would abstain from using the NFS trademark with immediate effect and failure to comply with the same would invite legal proceedings Prohibition to use NFS network All members that have been terminated from NFS membership would be deprived of the privilege to use the National Financial Switch for any transactions Ongoing rights and obligation of debarred members Any pending dispute pertaining to transaction errors, chargebacks, etc. not resolved before the member is debarred, would be retrieved from the respective member s settlement account. The debarred member should not disclose any information regarding the NFS network or any knowledge gained through participation in the NFS network to the external world. Failure to comply with the same would be treated as breach of trust and would invite legal penalties. This rule would be binding on the debarred member for one year from the date of the termination. 9.6 Penalties NPCI reserves the right to impose penalties for an amount equal to one-time membership fee on members participating in the NFS network on violating NFS-OSG for ATM sharing through NFS Frequent deviation from NFS-OSG In the event of non-compliance with NFS-OSG, NPCI reserves the right to notify the member or directly impose a penalty on the member depending on its past record. No fines would be imposed if rectification happens within the stipulated timeframe set by NPCI, failing to abide by which would be subject to Steering Committee recommendations/legal penalties. V 2.1 Page 66 of 92

68 9.6.2 Pending Dues It is obligatory for members to clear all pending dues and fines within the stipulated timeframe set by NPCI. Failure to comply with this would result in suspension/termination from further participation Invoicing Fines will be billed separately and would be sent to the respective members. Fines would be payable to NPCI in accordance with the terms and conditions as defined in the invoice. V 2.1 Page 67 of 92

69 V 2.1 Page 68 of 92

70 10.0 Annexures 10.1 Annexure A: BIN Update form (On the letter head of the Bank) BIN UPDATE FORM Ref. No: Date: To Mr. Ramachandran Sundaresan HEAD NFS-OPERATIONS, National Payments Corporation of India 13 th Floor R-Tech Park, Nirlon Complex, Off Western Express Highway Goregaon(E), Mumbai Sub: - BIN Update intimation Dear Sir, This is to inform you that the bank has added the following BIN to its card base. We request NFS to do the needful so as to route transactions with the enclosed BIN through NFS. BIN Bank Name Card Length (16/19) Issuer Type (RuPay, VISA, Master Card etc.) Card Type (ATM, Debit, Prepaid, Credit) Card Description (Platinum, Gold etc.) Thanking you Signature: Name: (Bank Name) Company Seal: V 2.1 Page 69 of 92

71 10.2 Annexure B: Card Specification Encoding Track I The encoding of Track I would conform to the prevailing ISO standard for Track I. When the Primary Account Number (PAN) contains a major industry identifier of 5 (for instance) and the first digit of the Issuer Identification Number (IIN) is 9, the following minimum data must be encoded on Track I: Start Sentinel Format Code Primary Account Number Field Separator Country Code Customer Name Expiration Date Interchange Designator Service Code End Sentinel Longitudinal Redundancy Check In all other cases, the following minimum data should be encoded on Track I mentioned above, except the following: Expiry Date Interchange Designator Track II This is meant for use in online equipment terminal for retail and financial services. All ATMs participating in the NFS network should support both the Old and New formats for Track II. When the PAN contains a major industry identifier of 5 (for instance) and the first digit of the Issuer Identification Number (IIN) is 9, the following minimum data must be encoded on Track II: Start Sentinel Primary Account Number Field Separator V 2.1 Page 70 of 92

72 Country Code Expiration Date Interchange Designation Service Code End Sentinel Longitudinal Redundancy Check In all other cases, the following minimum data should be encoded on Track II (as mentioned above) except the following: Start Sentinel Primary Account Number 10.3 Annexure C: Issuer Raw Data file KIB **************** TPCN16981 TPCN1698GHARONDA SECTOR-9,GHANSMUMBAI MHIN AXA KIB **************** TPCN16981 TPCN1698GHARONDA SECTOR-9,GHANSMUMBAI MHIN AXA KIB **************** CWCW60604 CWCW6060ICHALKARANJI BRANCH:WARICHALKARANJI MHIN AXA KIB **************** CWAC60602 CWAC6060JAKATNAKA ICHALKARANJI.KOLHAPUR MHIN AXA KIB **************** CWAC60602 CWAC6060JAKATNAKA ICHALKARANJI.KOLHAPUR MHIN AXA V 2.1 Page 71 of 92

73 10.4 Annexure D: Acquirer Raw Data file XYZ **************** ATMNAR03 ATMNAR03NEAR DATTA MANDIR NARSOBAWADI MHIN XYZ **************** ATMNAR03 ATMNAR03NEAR DATTA MANDIR NARSOBAWADI MHIN XYZ **************** ATMNAR03 ATMNAR03NEAR DATTA MANDIR NARSOBAWADI MHIN XYZ **************** ATMNAR03 ATMNAR03NEAR DATTA MANDIR NARSOBAWADI MHIN XYZ **************** ATMNAR03 ATMNAR03NEAR DATTA MANDIR NARSOBAWADI MHIN Annexure E: Issuer STL file ABC BANK PARTICIPANT ISSUER ACTIVITY Proc Date : 25/02/14 Page : Indian Rupee (India) Run Date : 26/02/14 Prog : ZSTL7ISR Run Time : 1:52:57 Id : ISSRP SETTLEMENT APPRVL S CARD NUMBER TRAN DESC TRAN AMT ACQUIRER FEE TRAN AMT ISSUER FEE NETWORK FEE NUMBER ERROR F **************** WTD SAV NO FUNDS 24/02/14 23:00: GHARONDA SECTOR-9,GHANSMUMBAI MHIN **************** WTD SAV NO FUNDS 24/02/14 23:01: GHARONDA SECTOR-9,GHANSMUMBAI MHIN **************** WTD SAV 5, , /02/14 5:42:02 17 UBI PAUD ROAD BR PUNE MHIN **************** WTD SAV /02/14 6:05: GANGAWESH KOLHAPUR MHIN **************** WTD CCD 1, , /02/14 22:51: BYTCO NASHIK MHIN ABC BANK PARTICIPANT ISSUER ACTIVITY Proc Date : 25/02/14 Page : Indian Rupee (India) Run Date : 26/02/14 Prog : ZSTL7ISR Run Time : 1:52:57 Id : ISSRP SUMMARY TOTALS TRANSACTION ---NUMBER SETTLEMENT AMOUNT DESCRIPTION APPRV DENIED DEBITS CREDITS ISSUER FEE NETWORK FEE NET STLMNT AMOUNT WTD CCD , , WTD SAV , , SUBTOTAL ,741, ,741, INQ CCD INQ SAV SUBTOTAL MSP SUBTOTAL PNC SUBTOTAL ====== ====== =================== =================== =================== =================== =================== TOTAL ,741, ,741, V 2.1 Page 72 of 92

74 10.6 Annexure F: Acquirer STL file ABC BANK S E T T L E M E N T Proc Date : 25/02/14 Page : Indian Rupee (India) PARTICIPANT ACQUIRER ACTIVITY Run Date : 26/02/14 Prog : ZSTL7AQR Run Time : 1:52:30 Id : ACQRP SETTLEMENT S CARD NUMBER M TRAN DESC TRAN AMT ACQUIRER FEE TRAN AMT ACQUIRER FEE NETWORK FEE ERROR F **************** WTD CCD /02/14 23:00: ATM0024 JAWAHARNGR ICHALKARANJI MHIN **************** WTD CCD 2, , /02/14 23:03: ATM0036 BELGAON BELGAON KAIN **************** WTD SAV /02/14 23:29: ATM0012 MAHAVEER NAGAR HUPARI MHIN **************** WTD CCD /02/14 22:44: ATM0192 DKTE COLLEGE ICHALKARANJI MHIN **************** WTD CCD 4, , /02/14 22:45: ATM0023 GULTEKDI PUNE MHIN ABC BANK S E T T L E M E N T Proc Date : 25/02/14 Page : 28 PARTICIPANT ACQUIRER ACTIVITY Run Date : 26/02/14 Prog : ZSTL7AQR 356 Indian Rupee (India) Run Time : 1:52:30 Id : ACQRP SUMMARY TOTALS TRANSACTION ---NUMBER SETTLEMENT AMOUNT DESCRIPTION APPRV DENIED DEBITS CREDITS ACQUIRER FEE NETWORK FEE NET STL AMOUNT INQ CCD INQ SAV SUBTOTAL WTD CCD , , WTD SAV , , SUBTOTAL ,201, ,201, ====== ====== =================== =================== =================== =================== =================== TOTAL ,201, ,201, UNPROCESSED GRAND TOTAL ,201, ,201, ABC BANK S E T T L E M E N T Proc Date : 25/02/14 Page : 29 PARTICIPANT ACQUIRER ACTIVITY Run Date : 26/02/14 Prog : ZSTL7AQR Run Time : 1:52:30 Id : ACQRP PARTICIPANT TOTALS TRANSACTION ---NUMBER SETTLEMENT AMOUNT DESCRIPTION APPRV DENIED DEBITS CREDITS ACQUIRER FEE NETWORK FEE NET STL AMOUNT CURRENCY CODE 356 INQ CCD INQ SAV SUBTOTAL WTD CCD , , WTD SAV , , SUBTOTAL ,201, ,201, TOTAL ,201, ,201, UNPROCESSED GRAND TOTAL ,201, ,201, V 2.1 Page 73 of 92

75 10.7 Annexure G: Daily Settlement Report format Daily Settlement Statement for ABC Bank as on DD/MM/YYYY Description No. Of Txn Debit Credit Acquirer BI Approved Fee Acquirer BI Approved Fee (Micro-ATM) Acquirer BI Approved Fee - Service Tax Acquirer BI Approved Fee - Service Tax (Micro- ATM) Acquirer BI Declined 7580 Acquirer BI Declined (Micro-ATM) 11 Acquirer CR Approved Fee 1 5 Acquirer CR Approved Fee - Service Tax Acquirer CR Declined 23 Acquirer Fund Transfer Approved Fee 5 75 Acquirer Fund Transfer Approved Fee - Service Tax Acquirer Fund Transfer Declined 51 Acquirer MS Approved Fee Acquirer MS Approved Fee - Service Tax Acquirer MS Declined 703 Acquirer PC Approved Fee Acquirer PC Approved Fee - Service Tax Acquirer PC Declined 55 Acquirer SR Approved Fee Acquirer SR Approved Fee - Service Tax Acquirer SR Declined 597 Acquirer WDL Approved Fee Acquirer WDL Approved Fee (Micro-ATM) Acquirer WDL Approved Fee - Service Tax Acquirer WDL Approved Fee - Service Tax (Micro- ATM) Acquirer WDL Declined Acquirer WDL Declined (Micro-ATM) 5 Acquirer WDL Transaction Amount Acquirer WDL Transaction Amount (Micro-ATM) Acquirer WDL - Processed Late Reversals and Reversed Acquirer WDL Approved fee Acquirer WDL - Processed Late Reversals and Reversed Acquirer WDL Approved fee - Service Tax 17.4 V 2.1 Page 74 of 92

76 Acquirer WDL - Processed Late Reversals and Reversed Acquirer WDL Transaction Amount Beneficiary Fund Transfer Transaction Amount Issuer BI Approved Fee Issuer BI Approved Fee (Micro-ATM) Issuer BI Approved Fee - Service Tax Issuer BI Approved Fee - Service Tax (Micro-ATM) 17.4 Issuer BI Approved NPCI Switching Fee Issuer BI Approved NPCI Switching Fee - service Tax Issuer BI Declined 8963 Issuer CR Approved Fee Issuer CR Approved Fee - Service Tax 14.5 Issuer CR Approved NPCI Switching Fee 20 9 Issuer CR Approved NPCI Switching Fee - service Tax Issuer CR Declined 9 Issuer Mobile Registration Declined 18 Issuer MS Approved Fee Issuer MS Approved Fee - Service Tax Issuer MS Approved NPCI Switching Fee Issuer MS Approved NPCI Switching Fee - service Tax Issuer MS Declined 965 Issuer PC Approved Fee Issuer PC Approved Fee - Service Tax Issuer PC Approved NPCI Switching Fee Issuer PC Approved NPCI Switching Fee - service Tax Issuer PC Declined 125 Issuer SR Approved Fee Issuer SR Approved Fee - Service Tax 23.2 Issuer SR Approved NPCI Switching Fee Issuer SR Approved NPCI Switching Fee - service Tax Issuer SR Declined 1 Issuer WDL Approved Fee Issuer WDL Approved Fee (Micro-ATM) Issuer WDL Approved Fee - Service Tax Issuer WDL Approved Fee - Service Tax (Micro- ATM) Issuer WDL Approved NPCI Switching Fee V 2.1 Page 75 of 92

77 Issuer WDL Approved NPCI Switching Fee - service Tax Issuer WDL Declined Issuer WDL Declined (Micro-ATM) 16 Issuer WDL Transaction Amount Issuer WDL Transaction Amount (Micro-ATM) Issuer WDL - Processed Late Reversals and Reversed Issuer WDL Approved fee Issuer WDL - Processed Late Reversals and Reversed Issuer WDL Approved fee - Service Tax Issuer WDL - Processed Late Reversals and Reversed Issuer WDL Transaction Amount Remitter Fund Transfer Approved Fee Remitter Fund Transfer Approved Fee - Service Tax 26.1 Remitter Fund Transfer Approved NPCI Switching Fee Remitter Fund Transfer Approved NPCI Switching Fee - service Tax Remitter Fund Transfer Declined 40 Remitter Fund Transfer Transaction Amount 1 50 Settlement Charges 0 Issuer / Acquirer Sub Totals Settlement Amount Net Adjusted Amount Net Adjusted Fee with Tax Net Late Chargeback Fee Debited Including Service Tax Net Late Chargeback Fee Reversal Debited Including Service Tax Net Penalty Charge for Non-Complience with Service Tax 0 Net Penalty Charged on EJ Discrepancy Including Service Tax 229 Net Penalty Reversal charged on EJ Discrepancy including Service Tax Arbitration Case Presentment Fee for NPCI including service tax 0 Net Chargeback raised after 17 days Fee charged on Pre-Arbitration including Service Tax Net Chargeback raised after 17 days Fee Charged on Pre-Arbitration rejection including Service Tax V 2.1 Page 76 of 92

78 Re-Credit Customer Account Penalty (Pre- Arbitration Partial Rejected) 0 Final Settlement Amount Dispute Adjustments Description Ref. No Debit Credit Chargeback Details Chargeback From XXX ' Chargeback From XXX ' Total Chargeback Amount CREDIT Adjustment Details CREDIT Adjustment From XXX ' CREDIT Adjustment From XXX ' / Total CREDIT Adjustment Amount Pre Arbitration Details Pre Arbitration From XXX 'CHB Pre Arbitration From XXX 'NP Total Pre Arbitration Amount Pre-Arbitration Decline Details Pre-Arbitration Decline from XXX ' Pre-Arbitration Decline from XXX ' Total Pre-Arbitration Decline Amount Representment Details Representment From XXX ' Representment From XXX ' V 2.1 Page 77 of 92

79 Total Representment Amount Adjustment Sub Total Net Adjusted Amount Reversal of Penalty for EJ Discrepancy to XXX '12942( ) Reversal of Penalty for EJ Discrepancy to XXX '2406( ) Reversal of Penalty for EJ Discrepancy to XXX ' ( ) Chargeback raised after 17 days Fee Charged on Pre-Arbitration rejection to XXX '2406( ) Reversal of Penalty to XXX ' ( ) Reversal of Penalty to XXX 'AB/REP/2075( ) Goodfaith chargeback not accepted/rejected raised by XXX XXX ( ) 1500 Penalty for not raising credit adjustment To XXX XXX ( ) Penalty for not raising credit adjustment To XXX XXX ( ) Chargeback raised after 17 days Fee Charged on Pre-Arbitration rejection to XXX XXX/PARJC/ ( ) Goodfaith chargeback not accepted/rejected raised to XXX 'CRM ( ) Goodfaith chargeback not accepted/rejected raised by XXX 'GF/ISS/FSS/6977( ) 500 Chargeback raised after 17 days Fee Charged on Pre-Arbitration rejection to XXX 'NA ( ) Chargeback raised after 17 days Fee Charged on Pre-Arbitration rejection to XXX 'NA ( ) Penalty for not raising credit adjustment To XXX NFS/CB/XXX/ /73560( ) Penalty for not raising credit adjustment To XXX NFS/XXX/396665/7386( ) Goodfaith chargeback not accepted/rejected raised by XXX 'NFSG3054( ) 5000 Goodfaith chargeback not accepted/rejected raised by XXX 'NFSG3055( ) 5000 Penalty for not raising credit adjustment To XXX 'NI ( ) Chargeback raised after 17 days Fee charged on Pre-Arbitration to XXX XXX_ ( ) Penalty for EJ Discrepancy To XXX XXX_ ( ) Penalty for EJ Discrepancy To XXX XXX_ ( ) Chargeback raised after 17 days Fee charged on Pre-Arbitration to XXX XXX_ ( ) Chargeback raised after 17 days Fee charged on Pre-Arbitration to XXX XXX_ ( ) Penalty for not raising credit adjustment To XXX XXX/XXX/NI ( ) Penalty for not raising credit adjustment To XXX XXX/XXX/NI ( ) Penalty for not raising credit adjustment To XXX XXX/XXX/NI ( ) V 2.1 Page 78 of 92

80 Penalty for not raising credit adjustment To XXX XXX/XXX/NI ( ) Penalty for not raising credit adjustment To XXX XXX/XXX/NI ( ) Summary For Micro ATM Transactions(Approved Transaction)for Union Bank Of India as on 21/05/2016 Description FeeSlab Count TxnAmt Fee Fee Tax Acquirer WDLTransaction (Micro ATM) Upto Rs Acquirer WDLTransaction (Micro ATM) Rs.2001-Rs Issuer WDLTransaction (Micro ATM) Upto Rs Issuer WDLTransaction (Micro ATM) Rs.2001-Rs Issuer WDLTransaction (Micro ATM) Above Rs Annexure H: Issuer Verification file ISSUER : SBI State Bank of India REJECTED ITEMS Proc Date: 25/02/14 Page: 1 Product: GDN UNKNOWN Run Date: 26/02/14 Prog: ZSTL7VAR Acquirer: SIB SOUTH INDIAN BANK Run Time: 1:52:12 Id: VERAF Card Number Account Number Trace Nbr Date Time Description Ref Number Error Requested Transaction Amt ISSUER Settlement Amt ACQUIRER SETTlement Amt Cardholder Billing Amt ******************* /12/13 17:25 WTD SAV UNABLE TO PROC 10, ******************* /12/13 17:25 WTD SAV UNABLE TO PROC 10, ******************* /12/13 17:25 WTD SAV UNABLE TO PROC 10, ******************* /12/13 17:25 WTD SAV UNABLE TO PROC 10, ******************* /12/13 17:25 WTD SAV UNABLE TO PROC Card Number Account Number Trace Nbr Date Time Description Ref Number Error Requested Transaction Amt ISSUER Settlement Amt ACQUIRER SETTlement Amt Cardholder Billing Amt ****************** ******************* /02/14 23:19 WTD SAV UNABLE TO PROC ISSUER : SBI State Bank of India REJECTED ITEMS Proc Date: 25/02/14 Page: 810 Product: GDN UNKNOWN ACQ PARTICIPANT TOTALS Run Date: 26/02/14 Prog: ZSTL7VAR ACQUIRER: KLB Kalupur Bank Run Time: 1:52:12 Id: VERAF ---Number ISSUER Settlement Amt Description Debit Credit Debit Credit TOTAL UNKNOWN GRAND TOTALS ISSUER : SBI State Bank of India REJECTED ITEMS Proc Date: 25/02/14 Page: 811 Product: GDN UNKNOWN PRODUCT TOTALS Run Date: 26/02/14 Prog: ZSTL7VAR Run Time: 1:52:12 Id: VERAF ---Number ISSUER Settlement Amt Description Debit Credit Debit Credit WTD WTD CUR WTD SAV , WTD CCD INQ CUR INQ SAV MSP , TOTAL MINI STATEMENT PRINT , GRAND TOTALS V 2.1 Page 79 of 92

81 10.9 Annexure I: Acquirer Verification file Acquirer: PQR BANK Verification Items Report Proc Date: 25/02/14 Page: 1 Product: GDN UNKNOWN Run Date: 26/02/14 Prog: ZSTL7VIR Issuer: ABC AXIS BANK Run Time: 1:47:24 Id: VERIF Card Number Account Number Trace Nbr Date Time Description Ref Number Error Requested Transaction Amt Acquirer Settlement Amt Issuer Settlement Amt Cardholder Billing Amt **************** /02/14 23:15 WTD SAV 0030 FULL REVERSAL 5, Acquirer: PQR BANK Verification Items Report Proc Date: 25/02/14 Page: 2 Product: GDN UNKNOWN ISSUING PARTICIPANT TOTALS Run Date: 26/02/14 Prog: ZSTL7VIR Issuer: ABC BANK Run Time: 1:47:24 Id: VERIF ---Number Requested Transaction Amt Description Debit Credit Debit Credit WTD SAV 1 0 5, , TOTAL WITHDRAWAL , GRAND TOTALS Acquirer: PQR BANK Verification Items Report Proc Date: 25/02/14 Page: 3 Product: GDN UNKNOWN Run Date: 26/02/14 Prog: ZSTL7VIR Issuer: ABC BANK (ISSUER) Run Time: 1:47:24 Id: VERIF Card Number Account Number Trace Nbr Date Time Description Ref Number Error Requested Transaction Amt Acquirer Settlement Amt Issuer Settlement Amt Cardholder Billing Amt **************** /02/14 18:39 WTD SAV FULL REVERSAL 10, **************** /02/14 8:08 WTD CCD SandF NOT PROC **************** /02/14 10:52 WTD CCD SandF NOT PROC 2, **************** /02/14 12:01 WTD CCD SandF NOT PROC **************** /02/14 12:03 WTD CCD SandF NOT PROC **************** /02/14 12:04 WTD CCD SandF NOT PROC Acquirer: PQR BANK Verification Items Report Proc Date: 25/02/14 Page: 73 ACQUIRING PARTICIPANT TOTALS Run Date: 26/02/14 Prog: ZSTL7VIR Run Time: 1:47:24 Id: VERIF ---Number Requested Transaction Amt Description Debit Credit Debit Credit WTD CUR , WTD SAV , WTD CCD , INQ CCD MSP , TOTAL MINI STATEMENT PRINT , GRAND TOTALS V 2.1 Page 80 of 92

82 10.10 Annexure J: Verification Reversal report Annexure K: Bulk Upload file format bankadjref,flag,shtdat,adjamt,shser,shcrd,filename,reason IIBAXB141007,B, ,0,1130, ,Chargebackfile,1 IIBAXB141007,B, ,0,1131, ,Chargebackfile,1 V 2.1 Page 81 of 92