Demonetisation: Digital payments could help us deal with corruption

The surprise move by Prime Minister Narendra Modi of banning Rs 500 and Rs 1000 notes, has stirred quite a storm among the masses. While the move to curb corruption has been lauded, it has also received criticism by common people as they thronged to ATMs and banks. Amid the chaos, digital payments have suddenly taken the centrestage. Post the announcement, we saw mobile fintech companies congratulate Modi for the move. People who have been relying on digital transactions for daily utilities using cash, driving in mobile payments could be a little difficult. https://twitter.com/narendramodi/status/796038911491354625?ref_src=twsrc%5Etfw We’ve been talking about how these digital payments bring in convenience such a payments via a few clicks, tendering exact change, and so on. But, suddenly it’s corruption-free India takes to the top of the list of the benefits introduced by digital payments. Bipin Preet Singh, Founder, MobiKwik said, “Corruption has plagued our country and this currency reform is the boldest step towards eliminating this evil. Now, anyone accepting large amount of money in cash, will have to declare the source. Also, bank and wallet transactions can be traced to identify the beneficiary.” Similarly, Madhur Deora, CFO, Paytm said, “We are pleasantly shocked by the incredibly bold move by the Prime Minister.  This is a huge step in the right direction for digital and corruption-free India.  This move has the potential to transform and leapfrog India in to one of the most progressive and digital nations.” How can digital transaction or mobile money possibly help curb corruption. The answer is simple – digital transactions can be traced. This means there is sort of transparency. Citrus Pay founder Jitendra Gupta said, “Digital transactions leave trail for every transaction and don’t go unaccounted in any manner. Digital transaction keeps money in banking system which is obvious benefit to economy and there is no chance of parallel money market. When you have accounting of every rupee, people tend to fear doing wrong including social evil such as corruption.” The deep penetration of mobile and the accessibility given to users has played a huge role. After all, it took us decades to move from cash to plastic money, and a few years for RBI to take mobile money seriously. A small kirana store can now accept mobile money, and this will help him trace all payments. However, we are now, in what can be called a transition period. “With any such moves, there will be a transition period where people may find it inconvenient. Paytm is going to have a single-minded focus on allowing customers and merchants in digitising payments, to support the Prime Minister’s initiative and reduce inconvenience for the public,” adds Deora. And, the demonetisation has suddenly resulted to increase in the number of people opting for mobile money by manifold. “We are seeing a massive increase in merchant sign-ups, both online and offline.  Online merchants who were relying on COD will need Paytm’s easy to use and ubiquitous solution.  For offline merchants and delivery persons, we are the logical substitute for cash, with our zero merchant discount rate solution, and easy to use QR codes.  We are also seeing massive number of new customer sign-ups and also existing customers increasing their limits through KYC,” Deora further added. It should be noted that for payments over Rs 10,000 using Paytm requires the user to submit KYC documents.

However, in a country that has over 95 percent transactions made via cash, deeper penetration of mobile phones and a few handful services may not be enough. We need an infrastructure in place to ensure most merchants, services, utilities and so support digital transactions. so that mobile money awareness reaches rural areas. There need to be more number of merchants and services supporting digital/mobile transactions.