Enhanced Remittance Data Could Multiply Electronic Fund Transfer Volumes

hdfc02My property management company in UK wanted me to quote the following reference along with my monthly rent payment:


While I could’ve easily written this on the back of a cheque, there was no way to do this on an electronic payment since the reference field of my Online Banking’s fund transfer screen didn’t let me type beyond MCS MERIDIAN CLI

As a payments professional, I knew that inadequate remittance info would make it tricky to reconcile a payment and risk the payment falling into a “cyberabyss”. Therefore, I refrained from paying my rents electronically. Click here for more details.

I’ve encountered similar situations many times through the following years in India. Ergo, I’ve shied away from electronic fund transfer (EFT) methods like NEFT.

I recently came across a few examples of individuals and businesses who have developed cold feet towards EFTs.


I know a company that always paid its ISP’s bills on time but found its Internet connection getting disconnected for non payment of bills. Because I know a bit about the inner workings of payment networks, they sought my help to figure out what was happening. This is what I found out:

The ISP needed some basic info like Customer Number and Bill Number along with the payment so that it could match its collections against the specific invoice. The company couldn’t fit this info in the reference field of its NEFT transfer. Thinking “What can go wrong?”, the company went ahead anyway and made the payment electronically. Big mistake. Lacking adequate info to link the payment to the company, the receipt fell headlong into the ISP’s cyberabyss. As per the ISP’s accounts receivable system, the bill is outstanding. Ergo it disconnected the company’s Internet connection. It took a lot of back-and-forth interactions between the company and the ISP to resolve the mess.

These days, this company pays its bills strictly by cheque. It can write as much “remittance info” as the ISP wants on the reverse of the cheque. Ever since it switched to cheques, it has never suffered disconnection of its line.


My alma mater’s alumni association recently conducted a short event for which it charged a token fees of INR 200 (~US$2.5). It accepted payment via cheque and NEFT. In the past, the limited amount of info accompanying NEFT payments had caused it huge amount of reconciliation problems. Therefore, this time, it went out of the way to devise a comprehensive procedure to ensure that all NEFT receipts could be traced back to the appropriate source and given due credit. While you can find the full details of the procedure in the following diagram, suffice to say that it involved jumping through several hoops across website, email and telephone.


While we were all uniformly appreciative of the efforts of the alumni association for trying to rectify what was essentially a lacuna in the EFT rails, an overwhelming majority of attendees simply wrote cheques.

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