Despite major gains made in digital payments since demonetisation, 96 percent of transactions are still done in cash. With only 25 lakh POS terminals deployed in India, acceptance remains the most critical challenge.
Prime Minister Narendra Modi recently announced a goal of 2,500 crore digital transactions in India in the budget calendar year 2017-18. This vision can only be achieved by growing the electronic payments ecosystem in India with the help of every willing payments provider. India must convert more consumers to use and demand electronic payments and execute an exponential growth in merchant acceptance. And this work must be done with urgency.
Prime Minister Narendra Modi recently announced a goal of 2,500 crore digital transactions in India the budget calendar year 2017-18.
The Universal Access to Infrastructure and Open Payment Systems framework is essential to maximising efforts to increase acceptance in India. All financial institutions, payment solutions, networks and providers should be aligned with government in educating and converting consumers, merchants and traders to digital payments. Government alone cannot reach the many crore that make up the payments universe.
To further advance demonetisation cashless vision by fundamentally changing business and consumer behavior and and reach 2,500 crore digital transaction goal, Government of India should work to establish electronic payments for actual commerce as opposed to being a mechanism to obtain cash through ATMs:
- Create policy directives to bring category wise caps on digital payments for specific categories
- Tax rebates for consumers for certain types of digital payments. Government receipts, petrol, and education are some leading examples
- Tax rebates for merchants either in the form of sales tax relief as well as based on increase in sales using digital means
- Implement Reward/Incentive Scheme for both, Merchants and Consumers across all payment options
- Create more ubiquity for acceptance and adoption of prepaid instruments
- Deployment of mobile QR-code based card-acceptance solutions – i.e. BharatQR to enable card acceptance through feature phones and smart phones without any additional requirement of infrastructure
To better encourage universal adoption and socialisation of digital payments:
- Remove requirement for Banks to report electronic transactions and make consumers fearless to go for cashless economy
- Form District level committees comprising of Officials and Trade representatives to monitor the adoption at District level to drive inclusive growth
- No card refusal / no surcharge rule and enforcement
- Assign card issuance based targets to all issuer banks for building acceptance infrastructure. Target of 40 terminals per 10K cards would lead to additional 1.5MM terminals as of now
- Allow Non-Bank Financial Companies (NBFC) to issue digital payment products