Daily Excelsior Op-Ed 10/12/2016
It was not even in the dreams of people in the era of barter system of transactions that a common paper currency would take over all kinds of transactions and would be recognised over a great span of area. Analogy finds perfect match considering the shift towards a cashless society from the current paper based currency and transaction. Many nations around the globe have mastered the art of cashless transactions with proper infrastructure, administrative will and societal acceptance. Scandinavian nations like Sweden and Denmark lead the marathon. According to Riksbanken, Sweden’s central bank, cash in circulation has come down from 106 million kroner to 80 million kroner in last 7 years with further decline of 50% in next half a decade. Furthermore, Sweden is also considering a plan to issue a national digital currency ‘e-krona’ in near future. Even developing countries such as Kenya is the one of the most cited success story.
India is undoubtedly moving towards a society which would be dealing in more cashless transactions owing to increasing mobile and internet penetrations. At present, more than one billion Indians are using mobile phones and more than 300 million Indians use their phones regularly for accessing the Internet. Slew of measures doled out to expedite the process of transforming India into a less-cash economy by the Government of India under the flagship campaign of Digital India to fulfill the goals, envisaged by PM Modi, of transforming India into a corruption-free, citizen-centric and a developed state in real sense.
Many innovative, simplified and technological sound solutions are there. With schemes like e-governance and digital India, Government itself is putting all the fuel to help India digitize and grow transparently.
One of the most important plinths in the path of going towards a less-cashless society was laid with the fabrication of plastic currency in the form of ATM debit or credit cards. Global average for payments by card stands above 40 percent. While urban and literates find it as a simplified mean to transact, rural digitally illiterate started winking towards it but yet not upto the mark in the race. Pradhan Mantri Jan Dhan Yojana ensured atleast one bank account in every household and it was encouraged to opt for Rupay debit cards alongwith. According to official figures, more than 25 crore Jan-Dhan accounts have been opened and nearly 20 crore ‘Rupay’ debit cards have also been issued. As guided by RBI policy, it has been mandatory for the banks to have their branches in villages with 2,000 or more population. And a large number of such branches have been opened. These proved to a boon during the demonetisation period and it is reported that demonetisation prompted unused Rupay card holders to transact through them in nearby bank ATMs or micro-ATMs. Aadhaar Enabled Payment System (AEPS) allows bank-to-bank transactions at Micro-ATMs requiring only Aadhaar card to deposit , withdraw or Aadhaar-to-Aadhaar funds transfer.
Point Of Sale (POS) swiping machines has been used since long in malls, supermarkets, cinemas etc. Their sale and usage picked the pace more than 30 folds after scrapping of old notes especially from smaller players like kirana stores, vegetable vendors and stationery marts. This shows that small trader is also adapting himself to modern payment options. Banks should market these small magical machines more effectively and these should be sold at subsidised prices.
Innovation can never be satiated and always aspire for more. Cash@POS is a proven solution in the US where any grocery store lets a customer pay with his card and withdraw up to $100 then and there. On similar lines, mobile Point-of-Sale (mPOS), type of POS where the phone is connected to a POS device via bluetooth or jack, has been garnering popularity in India. A startup named Ezetap Mobile Solutions Pvt. Ltd in partnership with SBI (State Bank of India) launched ‘Chota ATM’. This device can be bought by any legitimate business like local kirana wala stores etc, can open a zero balance current account with SBI and any smartphone with a WiFi or data connection. For any Cash@POS transactions, the amount plus commission are settled the next day into the bank account of the merchant. Such a mind-boggling concept finds its best utilization in the rural communities with scarce bank branches density.
E-commerce is not a nascent concept and their role in this phase of transition can’t be sidelined with most societal acceptance among any form of virtual markets and the trust bridge they have built over the years.They accept debit cards, credit cards or payment via e-wallets.
E-wallets, offered by private players and PSBs gathered a huge appreciation with their simplified layouts and modus operandi. With frequent cashbacks and offers, these have been increasingly enjoying the acceptance among youth. Recognizing their growing popularity, RBI recently extended their monthly usage limits to Rs 20,000 and they have been reporting a huge spurt in digital payments regularly.
Going one level further, National Payment Corporation of India (NPCI) came up with a panacean idea of unified payment in the form of UPI (Unified Payment Interface). It is a system that offers services like person to person fund transfer and merchant payments intra as well as inter-banks in a single mobile application. It has been built on the Immediate Payment Service(IMPS) platform meaning real time transactions.
An academically illiterate doesn’t mean he is also digitally illiterate. As quote aptly by PM in his one of Man-ki-Baat episode, “Most of Indians, no matter what their qualifications, know how to use social networking sites and transacting digitally is as simple as that.” To simplify further, the Government has made the support for Indian languages mandatory in all mobile phones to be sold in the country from July 2017. The new standard mandates mobile phone companies to provide message typing facility in English, Hindi and a regional language of user’s choice. Most of Indians even can’t own a basic smartphone and for them all these offerings prove to be a outlandish gimmickry but wait there is always a silver lining. NUUP (National Unified USSD Platform) is a USSD (Unstructured Supplementary Service Data) based mobile banking service from NPCI that brings together all the Banks and Telecom Service Providers. In NUUP, a customer can access banking services like fund transfer, mini-statements etc. by just pressing *99# from his feature mobile phones. This service works across all GSM mobile handsets.
To promote cashless economy and facilitate smooth flow of traffic at toll plazas, the Government has recently recommended automobile manufacturers to provide a ‘Digital Identity Tag’ (DIT) in all new vehicles to enable electronic payment at toll plazas.
The dream so envisaged would require not only governmental efforts but coordinated contributions from private sector and masses. For better technological-mediated financial inclusions, Government need to take some accelerated steps like providing subsidized phones to BPL households to enhance affordability, removing surcharges on digital transactions, incentives for private sector, regulating ISPs to maintain decent internet speed and upgradation of the same. Moreover, as a part of Corporate Social Responsibilities, private companies need to provide affordable platform to boost maximum participation .
There are plethora of positives of a cashless society. It would save cost of operation, printing cost, maintenance and security costs, would shrink the space available for black market economies and graft by increasing the transparency of transactions, might reduce the incentives for petty crime, decline in robberies and make life a little safer. However, a society shouldn’t shift towards an absolute cashless society citing some uncertainties like fear about what happens if a glitch temporarily takes down a digital payment network, vulnerability to cyber attacks, digital deceptions like creating fake mobile apps or imitating digital payment platforms etc. Technology can’t be fool-proof. A society completely neutralizing cash would succumb in above scenarios. Even Sweden’s Central bank, Riksbank, has said that the e-krona, which is expected to be issued in two years, will be complementary to cash and that it will not be a replacement. Therefore, an amalgamation of less-cash and more-cashless culture need to be cultivated and sustained.
It was not even in the dreams of people in the era of barter system of transactions that a common paper currency would take over all kinds of transactions and would be recognised over a great span of area. Analogy finds perfect match considering the shift towards a cashless society from the current paper based currency and transaction. Many nations around the globe have mastered the art of cashless transactions with proper infrastructure, administrative will and societal acceptance. Scandinavian nations like Sweden and Denmark lead the marathon. According to Riksbanken, Sweden’s central bank, cash in circulation has come down from 106 million kroner to 80 million kroner in last 7 years with further decline of 50% in next half a decade. Furthermore, Sweden is also considering a plan to issue a national digital currency ‘e-krona’ in near future. Even developing countries such as Kenya is the one of the most cited success story.
India is undoubtedly moving towards a society which would be dealing in more cashless transactions owing to increasing mobile and internet penetrations. At present, more than one billion Indians are using mobile phones and more than 300 million Indians use their phones regularly for accessing the Internet. Slew of measures doled out to expedite the process of transforming India into a less-cash economy by the Government of India under the flagship campaign of Digital India to fulfill the goals, envisaged by PM Modi, of transforming India into a corruption-free, citizen-centric and a developed state in real sense.
Many innovative, simplified and technological sound solutions are there. With schemes like e-governance and digital India, Government itself is putting all the fuel to help India digitize and grow transparently.
One of the most important plinths in the path of going towards a less-cashless society was laid with the fabrication of plastic currency in the form of ATM debit or credit cards. Global average for payments by card stands above 40 percent. While urban and literates find it as a simplified mean to transact, rural digitally illiterate started winking towards it but yet not upto the mark in the race. Pradhan Mantri Jan Dhan Yojana ensured atleast one bank account in every household and it was encouraged to opt for Rupay debit cards alongwith. According to official figures, more than 25 crore Jan-Dhan accounts have been opened and nearly 20 crore ‘Rupay’ debit cards have also been issued. As guided by RBI policy, it has been mandatory for the banks to have their branches in villages with 2,000 or more population. And a large number of such branches have been opened. These proved to a boon during the demonetisation period and it is reported that demonetisation prompted unused Rupay card holders to transact through them in nearby bank ATMs or micro-ATMs. Aadhaar Enabled Payment System (AEPS) allows bank-to-bank transactions at Micro-ATMs requiring only Aadhaar card to deposit , withdraw or Aadhaar-to-Aadhaar funds transfer.
Point Of Sale (POS) swiping machines has been used since long in malls, supermarkets, cinemas etc. Their sale and usage picked the pace more than 30 folds after scrapping of old notes especially from smaller players like kirana stores, vegetable vendors and stationery marts. This shows that small trader is also adapting himself to modern payment options. Banks should market these small magical machines more effectively and these should be sold at subsidised prices.
Innovation can never be satiated and always aspire for more. Cash@POS is a proven solution in the US where any grocery store lets a customer pay with his card and withdraw up to $100 then and there. On similar lines, mobile Point-of-Sale (mPOS), type of POS where the phone is connected to a POS device via bluetooth or jack, has been garnering popularity in India. A startup named Ezetap Mobile Solutions Pvt. Ltd in partnership with SBI (State Bank of India) launched ‘Chota ATM’. This device can be bought by any legitimate business like local kirana wala stores etc, can open a zero balance current account with SBI and any smartphone with a WiFi or data connection. For any Cash@POS transactions, the amount plus commission are settled the next day into the bank account of the merchant. Such a mind-boggling concept finds its best utilization in the rural communities with scarce bank branches density.
E-commerce is not a nascent concept and their role in this phase of transition can’t be sidelined with most societal acceptance among any form of virtual markets and the trust bridge they have built over the years.They accept debit cards, credit cards or payment via e-wallets.
E-wallets, offered by private players and PSBs gathered a huge appreciation with their simplified layouts and modus operandi. With frequent cashbacks and offers, these have been increasingly enjoying the acceptance among youth. Recognizing their growing popularity, RBI recently extended their monthly usage limits to Rs 20,000 and they have been reporting a huge spurt in digital payments regularly.
Going one level further, National Payment Corporation of India (NPCI) came up with a panacean idea of unified payment in the form of UPI (Unified Payment Interface). It is a system that offers services like person to person fund transfer and merchant payments intra as well as inter-banks in a single mobile application. It has been built on the Immediate Payment Service(IMPS) platform meaning real time transactions.
An academically illiterate doesn’t mean he is also digitally illiterate. As quote aptly by PM in his one of Man-ki-Baat episode, “Most of Indians, no matter what their qualifications, know how to use social networking sites and transacting digitally is as simple as that.” To simplify further, the Government has made the support for Indian languages mandatory in all mobile phones to be sold in the country from July 2017. The new standard mandates mobile phone companies to provide message typing facility in English, Hindi and a regional language of user’s choice. Most of Indians even can’t own a basic smartphone and for them all these offerings prove to be a outlandish gimmickry but wait there is always a silver lining. NUUP (National Unified USSD Platform) is a USSD (Unstructured Supplementary Service Data) based mobile banking service from NPCI that brings together all the Banks and Telecom Service Providers. In NUUP, a customer can access banking services like fund transfer, mini-statements etc. by just pressing *99# from his feature mobile phones. This service works across all GSM mobile handsets.
To promote cashless economy and facilitate smooth flow of traffic at toll plazas, the Government has recently recommended automobile manufacturers to provide a ‘Digital Identity Tag’ (DIT) in all new vehicles to enable electronic payment at toll plazas.
The dream so envisaged would require not only governmental efforts but coordinated contributions from private sector and masses. For better technological-mediated financial inclusions, Government need to take some accelerated steps like providing subsidized phones to BPL households to enhance affordability, removing surcharges on digital transactions, incentives for private sector, regulating ISPs to maintain decent internet speed and upgradation of the same. Moreover, as a part of Corporate Social Responsibilities, private companies need to provide affordable platform to boost maximum participation .
There are plethora of positives of a cashless society. It would save cost of operation, printing cost, maintenance and security costs, would shrink the space available for black market economies and graft by increasing the transparency of transactions, might reduce the incentives for petty crime, decline in robberies and make life a little safer. However, a society shouldn’t shift towards an absolute cashless society citing some uncertainties like fear about what happens if a glitch temporarily takes down a digital payment network, vulnerability to cyber attacks, digital deceptions like creating fake mobile apps or imitating digital payment platforms etc. Technology can’t be fool-proof. A society completely neutralizing cash would succumb in above scenarios. Even Sweden’s Central bank, Riksbank, has said that the e-krona, which is expected to be issued in two years, will be complementary to cash and that it will not be a replacement. Therefore, an amalgamation of less-cash and more-cashless culture need to be cultivated and sustained.
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