Chapter 1

Building the Best Electronic Payments System for India

In order for Government of India to meet its goal of 2500 crore annual digital transactions by March 2018 and for India’s small businesses to continue to grow in today’s competitive economy we need access to the best and safest payment options that technology has to offer. And we must have the ability to meet the demands of our customers. Consumers want convenience with multiple options for how to pay and similarly, merchants want to be able to accept all forms and channels of payment for business to prosper.

That’s why the Confederation of All India Traders and the Alliance for Digital Bharat … who together represent 6.34 crore traders and small businesses (Source: The National Sample Survey Office (NSSO) report titled “Key Indicators of Unincorporated Non-Agricultural Enterprises (Excluding Construction) in India) … respectfully ask Government of India to adopt the principles of Universal Access to Infrastructure and Open Payment Systems as they develop the roadmap to a cashless, digital India.

The idea is similar to Net Neutrality which guarantees competition amongst online providers. Universal Access will facilitate rapid growth in usage and foster an “innovation race” as infrastructure and open payment systems ensure India’s consumers, businesses and government have access to world class electronic payment technology. Together, these policies will help drive more competition in a free and open way, which will result in more investment and more innovation leading to lower costs for consumers and businesses. Open, universal access interoperable payment systems allow the payments eco-system to grow over time – this flexibility is a boon when technology and standards are constantly evolving. Universal Access to Infrastructure and an Open Payments System is critical to the effort to build merchant acceptance and ensure last mile connectivity for all of India given the expertise and resources established global players bring to the table.

Today, 96 percent of transactions in India are done in cash and our country has only about 25 lakh POS terminals. This needs to increase rapidly given India’s population, geography and number of merchants. Additionally, the acceptance infrastructure favors large businesses and retailers. Demonetisation and GST have dramatically accelerated the need for traders, merchants and the small business community to accept electronic payments … and to do it NOW. Because of this, the transition to a Less Cash society is a massive undertaking and we need the efforts of all payment providers to reach the last mile and help achieve universal acceptance in India embodied in the goal of 2500 crore digital transactions till March 2018.

To enable a truly Digital India, we request Government of India use all of the expertise, resources and capabilities of financial institutions and electronic payments providers to build a Less Cash India. Government must ensure universal access to an open, interoperable payments infrastructure as the fundamental governing principle towards developing the payments landscape in India. It cannot solve this problem alone. To enable consumer choice and competition, platforms such as Unified Payment Interface (UPI), Bharat Interface for Money (BHIM), Aadhaar Enabled Payment System (AEPS), and Bharat Bill Payment System (BBPS) should allow open universal access to all stakeholders.

Choice of digital payment systems will empower consumers, merchants and traders and make our businesses more competitive.

The ultimate goal of merchants, traders and small businesses is to accept all forms and providers of electronic payments. We should be able to transact business with every customer based on his or her preferred method of payment regardless of where those customers are from or how they pay. That will not happen without universal access to infrastructure and open payment systems or with a government-only solution.

A free and open market encourages a race-to-the-top for the best innovation and allows all payment providers to work on building acceptance. Without this dynamic, we are at risk of being left behind by the rest of the world. This also creates a huge risk in creating a single point of failure, which is more susceptible to cyber-attacks. Choice of digital payment systems will empower consumers, merchants and traders and make our businesses more competitive. The future of India after demonetisation depends on creating more opportunities for payments, not less. This is a moment of great opportunity for our country.

Universal Access to Infrastructure and an Open Payments System is in our national interest because it ensures India’s Less Cash Roadmap is clear, achievable and secure.

Together we can build the best electronic payments system for a Less-Cash India.