‘Cashless’ India: Nothing elitist about it

TV Ramachandran | Updated on July 28, 2020

The Covid lockdown has already increased digital transactions. Ramping up Internet access, security will provide another boost

Digital payments in India began to boom even before any of us had heard of coronavirus. Just between 2018 and 2019, our country saw a mammoth growth of 383 per cent in digital payments (according to Razorpay’s ‘The Era of Rising Fintech’ report). In 2020, easing of the national lockdown saw an uptick in digital transactions to ₹2.18-lakh crore in May, primarily due to the fear of contracting Covid-19 through cash transactions. Apart from convenience, digital payments offer the promise of greater transparency and reduced dependency on middle-men and banking monopolies. How do we accelerate the efforts to get all Indians the ability to conduct safe and convenient digital transactions as part of their daily lives?

Going cashless offers many benefits for economically developing countries such as ours. So, it comes as no surprise that one of the tenets of the Digital India Mission is the establishment of a “faceless, paperless, cashless” India. We are in good company, as Asia leads the world in the adoption of cashless payments, led by China with more than 600 million users (as reported by Fortune). More than half of South Korea’s 1,600 bank branches no longer deal with cash and several government institutions are already cashless, says a GlobalData report. This is the trend world over, making the move to digital transactions almost inevitable at this point.

Where India stands

Some might say cashless transactions are a lofty goal for a country like ours, where a significant portion of the population still suffers without access to basic necessities. Undoubtedly, these issues must be addressed for India to truly progress. The move towards more digital payments will not hamper, but boost the efforts to lift millions of Indians out of poverty. This is also why the Supreme Court deemed access to the Internet a fundamental right for all Indians, not just the elite.

The market demand is already there. Indians have proven, time and again, that we have a voracious appetite for inexpensive innovations that help ease daily activities. How many people today remember the amount of red tape involved in getting a phone number in the 1990s? At the time, the “pundits” believed telephones were a luxury for a chosen few. Fast forward a few decades to the end of 2019, and we have over 500 million Indians on smartphones with 77 per cent of them online (according to a techARC report). Digital transactions are merely an intuitive and inevitable extension of this progress.

Helping Indians conduct cashless transactions helps cut out the barrier of middle-men. Cashless payments will bring transparency through the system and help minimise the effects of corruption — at least at the ground level, for everyday transactions. It also helps us bypass the need for always playing “catch up” with developed countries that have robust credit and debit card transactions. Instead, we can direct our investments towards futuristic advancements like digital payments. So while we have obstacles in front of us, they are not insurmountable.

Internet penetration

To achieve the Prime Minister’s vision of a digital and cashless India, there are three overarching requirements. To start, we need to increase Internet penetration in the country. The incredible news is that India now has more rural Internet users than urban (according to the Internet & Mobile Association of India and a 2019 Nielson report). It is estimated that by 2023, 55 per cent of the population will have a smartphone, (Cisco’s Annual Internet Report 2018-2023). In spite of this, we stand at only 40 per cent Internet penetration. In comparison, China is at 61 per cent. Ramping up the laying of fiber-optic cable networks through the country, increasing the number of Wi-Fi hotspots, and leveraging the power of satellites to connect harder-to-reach areas is vital.

Finance Minister Nirmala Sitharaman’s May 26 announcement permitting private players to enter the world of satellites is a welcome step forward. The Ministry of Electronics and Information Technology is leading the initiative on the promotion of digital transactions, including digital payments. As part of the Digital India Mission, the government has been encouraging the use of digital payment methods to traverse national highways using FASTag. Last year, the government introduced ‘one nation, one ration card’, where the user can conveniently avail himself of food subsidies in any fair-price shop across the entire country. Currently, 17 States are integrated on this plan, and others must be incentivised to join.

During the Covid lockdown, the Reserve Bank of India Governor urged Indians to adopt digital transactions to maintain social distancing. The National Payments Corporation of India (NPCI), which oversees UPI and digital payments, has BHIM, a money transfer app that lets you pay or collect bank-to-bank payments using a mobile number. The popular app has 136 million downloads and counting. Of course, there are strong private contenders in this space such as PhonePe, PayTM, Google Pay, Amazon Pay, and the latest to gain NPCI approval, Whatsapp Pay.

Security and connectivity

Internet access is not the only barrier to adoption of digital payments. Educating users as well as ensuring the security of their data is essential. BHIM has been in the headlines under suspicions of a potential breach of sensitive and personal user data. The NPCI denies the breach and more details are yet to be unearthed. Regardless, the news of potential breaches scares away users. The RBI created a ‘central payments fraud information registry’ to aid in swift action against scammers and e-crooks. Multi-factor authentication is also mandatory in the country as per the RBI. But payment apps themselves must hold themselves to a higher standard and ensure that highest security measures are in place to safeguard their users’ data.

In 2020, whether you are a CEO or a kirana-store owner, chances are that your smartphone will be the first thing on your mind the second you wake up and the last thing you look at before you go to sleep at night. The brand of phone will vary, but the ubiquitous and convenient smartphone has transformed our day-to-day operations.

A recent survey of 11 countries by Capgemini reveals that India heads the pack in the usage of digital payments during the global pandemic, and it is the senior citizens who are leading the way. Eighty per cent of Indians aged 66 years and above indicated they would undertake digital transactions in the next six months versus a global average of only 35 per cent. To widen the net and get all Indians on board, we need to increase connectivity, ensure security of payments and data, and strengthen regulatory and legal repercussions against cybercriminals — goals that are achievable fairly easily.

The writer is President, Broadband India Forum. Views are personal.

Research inputs by Chandana Bala

Published on July 28, 2020

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