The government’s plan to reach 25 billion digital transactions in the next financial year will be driven by consumption-based payments, said experts, who expect digital education of both consumers and merchants along with security steps and enabling regulations to support the process.While demonetisation was a great push towards increased digital transactions, challenges to keep the momentum going remain as 90% of the Indian economy still uses cash, representatives of financial technology companies, wallet providers, banks and payment platforms said at a panel discussion on building a cashless future at the Global Business Summit on Tuesday.
“We need relevant solutions for different demographic as the masses may have different needs, then there’s low awareness levels, and economics … we feel every small merchant should be able to accept any kind of payment,” said Badal Malik, chief executive at Catalyst, a joint initiative by the Indian government and the United States Agency for International Development.
“Mobile wallets were good enablers. We need now to drive consumption, which in turn drives payments,” said Anil Mathur, director, enterprise partner and industry solutions sales at Microsoft India.
According to Adhil Shetty, chief executive of online loans marketplace Bankbazaar.com, yet another challenge to attain a cashless economy would be doing away with paperwork in the process to provide loans and issue other instruments.
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The government is targeting to achieve 25 billion transactions in India through multiple facilities including platforms such as Aadhaar Pay, Unified Payment Interface, Immediate Payment Service and debit cards. The government also launched a mobile app, Bharat Interface for Money (BHIM), for facilitating e-payments through bank accounts. Since December, it has been used by 125 lakh people.
As the government grapples with issues to take cashless payments to the masses, some are concerned about security and privacy issues.
“I’m wary of privacy - the government will not come back to me on my spending pattern or my family’s,” said Shhyam R Singhania, chairman of Enarr Group, which has interests in venture capital. He said the government has set up a committee of chief ministers under the Prime Minister to suggest ways to ease consumer concerns towards digital payment. Also, the Niti Aayog is undertaking creation of a payments regulator.
“While the intent is there, it boils down to execution and consumer education,” said Ritesh Pai, senior president and country head for digital banking at Yes Bank. He expects millennials, who prefer self-service transactions, to power the digital drive and take the share of cash payments down to 50-60% by 2025 from 90% at present.
Sunil Kulkarni, deputy managing director at wallet company Oxigen, said while wallets and cashless payments would hit core banking transactions, banks would remain relevant.
“Digital platforms should be used for smaller transactions which will lower the high cost per transaction, while banks can be used for larger transactions,” he said, adding that the market of 950 million customers was big enough to accommodate both methods.
Making more smartphones available to do digital transactions will be yet another enabler towards a cashless economy. “Having mobile phones with multilingual capability in various parts of the country can be a driver,” said Rajesh Khairajani, partner at advisory firm Inde Global, which is part of KNAV International.
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