Captured by : PG3. LEAD_3
Ever since the unexpected Demonetization move which took out the existing Rs. 500 and Rs. 1000 notes, the entire population of India is in a tizzy. First after having to stand in long queues to exchange old notes, which was followed by queues at the ATMs, the entire nation was somewhat disturbed about the whole initiative.
In the midst of this, the government goes a step ahead and revealed its vision for a cashless economy in India. To add to this, Goa is said to be the model state for experiment and is expected to go cashless by the end of this year. With Goans, like the rest of the Indian population, being highly dependent on cash payments, one is left to wonder if we would ever achieve a truly cashless economy.
According to the Reserve Bank of India, banks under it had issued 697.2 million debit cards and 25.9 million credit cards to customers as of July 2016. However, out of the 881 million transactions made using these cards, a whopping 92 percent were mere cash withdrawals from the ATMs.
Another major concern expressed is the security of cashless payment modes like credit cards or debit cards. The recent case of 32 lakh debit cards getting hacked just adds to the fears in the minds of people even before considering a cashless transaction. However, it is necessary to point out that such incidents are not due to criminals being able to crack the 128-bit encryption used on these cards but due to availability of card details from other sources.
While it is estimated that India has at least 1.45 million PoS terminals across the country, the number of ATMs in the country is over 2 lakhs, which makes it clear why plastic money (cards) end up as cash transactions. Further to make things worse, majority of the PoS terminals are located in major cities and mostly with branded and high-value sale shops.
Which brings us to the most commonly asked question: Can we use cashless transactions at our local retail stores. Maybe, but we clearly have a long long way to go. But this would require a dedicated level of seriousness from the Government and banking institutions along with the cooperation of the merchants and the customers.
Accounts for everyone:
For starters, the government is trying to provide bank accounts to every individual, which would mean mapping nearly 233 million new citizens in the system. Banks too are doing their bit by offering solutions like ‘Zero “Balance Accounts’. DBS Bank, seeing the situation in India, went a step ahead and launched the online-only DigiBank account which does not require the customer to ever visit a bank office.
Digital Wallets:
Private companies have started offering the e-Wallet facility to users which is an online prepaid account which can be used to make transactions. While the service started with only online transactions, many e-Wallets now support physical PoS transactions. Services like PayTm saw a sudden spike in usage after the demonetization move. Further, most banks too have their own e-Wallets like SBI’s Buddy, HDFC’s PayZapp or ICICI’s Pockets app.
Payment Banks:
Just at the time of demonetization, telecom operators, which already had their own wallet offerings, got into the payment business. Airtel Payments Bank is luring customers to open accounts by offering the highest interest rates in the country.
Meanwhile new entrant Reliance Jio, which has created waves in the telecom sector, is pushing out the Jio Money Merchant Services which could potentially turn out to be a major game changer considering that the company has already tied-up with all local shops and retailers and would offer extra convenience to the users.
UPI:
Finally, given RBI’s vision of cashless economy, the National Payments Corporation of India (NPCI) has launched the Unified Payments Interface (UPI) system which would allow users to transact using multiple bank accounts using the same platform. Further, the system provides a Virtual Payment Address (VPA) which provides a special username like ‘someone@icicibank’. As such users do not need to share any confidential account details and yet steadily receive payments from any bank.
- Jonathan Pereira is a technology enthusiast with a keen eye for mobile and mobile technology. He’s a foodie by heart, and loves both the edible chips and the non-edible silicon chips. Find him on twitter @GoanIdle
