Budget 2017: Government is taking the right measures to drive digital payments

Alfian Sharifuddin, Head - Technology & Operations at DBS Bank India writes on the Budget for the Financial year 2017-18. He points that it was quite an anticipated budget announcement for the digital players.

By Alfian Sharifuddin

It was quite an anticipated budget announcement for the digital players. It was widely anticipated that the FM would announce several new drives and initiatives in this area. To recap, there is a huge push towards continuing the move towards a cashless society. The notable change of not allowing cash transactions over 3 lakhs rupees was a clear driver of this message.

In essence, anyone now buying large ticket items would need to either perform an electronic transfer or payment in some other cashless form. In addition, there was mention of continued digital initiatives in the country. A push towards a lofty target of 2,500 crore UPI transactions annually shows a huge impetus to move towards a cashless society.

At an average of about 20 transactions per citizen that's an ambitious target across all segments and geographies. Regardless, it signals a very strong message that all players should take this drive seriously.

In addition, there was the announcement of wider coverage of digital acceptance capability at many daily use and critical infrastructure like petrol pumps and hospitals. AadharPay was also announced which signals the widespread acceptance of your registered biometric identification and bank account linkage to facilitate the ease of making cashless payments.

There was also a focus on the Bharat Interface for Money (or BHIM) which is a secure way of transferring money using the UPI handle and 2 new schemes to support BHIM apps. Using AADHAR based biometric authentication, users would be able to transfer money using the UPI handles which citizens can sign up for.

Now payments could possibly be completed with simply your fingerprint or iris being identified. It will be secure and safe. This, in conjunction with the Jan Dhan-Aadhar-Mobile (JAM) drive will significantly make cashless payments more widely accepted and will help drive the target of 2,500 crores that has been set.
All in, we believe that the government is taking the right measures to drive digital payments throughout the country.

Often, the issue with digital payments is the lack of not only mindset adoption amongst users, but also the lack of acceptance points to use stored value in the case of wallets and digital payment instruments in the case of BHIM based apps.

This is commonly known as the ecosystem. Many attempts fail because they only focus on one side of the equation which is the money store side. Little time is spent on the exit side, i.e. allowing for useful fulfillment of payments using the stored value or linked accounts. This quickly leads to the perception of a service being not useful and hence not adopted.

By focusing early on the fulfillment side of the equation, there will be a very high chance that the usefulness of the various schemes will increase. With the drive to increase acceptance points and continued education of its benefits we believe that there is only one way for digital and cashless payments and that is up.

The author is the Head - Technology & Operations at DBS Bank India.

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