Digital Transactions won't be viable till you address cost, convenience, confidence: Trai Chairman

TRAI Chairman, RS Sharma recently spoke at the IAMAI India Digital Summit suggesting that the payment industry should adopt something similar to interconnection charge for payments.

Trai Chairman, RS Sharma recently spoke at the IAMAI India Digital Summit suggesting that the payment industry should adopt something similar to interconnection charge for payments.

Interconnection charges allows for interoperability between telecom operators, for instance between Airtel and Vodafone. It also benefits the larger operators as the operator whose customer is receiving the call would be paying the operator whose customer is making the call. This technically encourages a telecom operator to push customers to make more calls. Bring this to the payments scenario, and this could push payments companies to try and get their customers to make more payments which in turn could help cut down costs.

He says, “My belief is that MDR is coming from the card world. Digital Transactions will not become sustainable unless you address the three C’s of cost, convenience, and confidence. When I transfer cash, it doesn’t have any cost. But if I do a digital transaction, I pay someone. If I’m paying with a card, then the work at the backend is zero. We have a work done principle for how much the telecom operator A pays to operator B, as termination charges. This is computed in terms of work done.”

Apart from this, the Chairman also spoke on various other relevant topics including privacy, net neutrality, digital India and so on.

Regarding privacy, he said that Aadhaar has design privacy as the basic tenet of its design principles. Privacy by design was adopted from the beginning itself. There are multiple things: Aadhaar is a random number. By a number, you can’t profile any person. Aadhaar collects minimum information: name, gender, age and communication address. Each authentication is informed by email and SMS. Aadhaar does not know anything about what kind of transaction is being performed. It doesn’t know how much money is transferred to you. Thereby the domain data is with the domain entity. Aadhaar only has logs of your identity authentication. "To say that Aadhaar violates privacy is wrong," said Sharma.

In a response to a question around Aadhaar being made mandatory he said, “On the first issue, UIDAI, their position is that it is voluntary enrollment. However, it is also true that the govt, through the Act, now law, they may make these services mandatory, because of the purpose of giving subsidies. If I’m giving subsidies to you, I need to know whether you are who you say you are, and not more than one person is taking subsidies. The identity-related questions are around duplicates and fakes, and identity establishment. I think there is nothing wrong in government making the Aadhaar number mandatory, if you want to draw benefits from the government. There are huge leakages which take place. Today the govt spends Rs 5,00,000 cr per annum on direct subsidies. A conservative estimate is a minimum of 10 percent of this is leakages. It is in the interest of the government that there is no duplication. Aadhaar provides a unique identity."

Probably a more interesting conversation was around internet in India. According to him, the national telecom policy (NTP) 2012 talked about affordable Internet but we are really not there as yet. Trai is a regulator, not implementers. We have been providing policy advice to the government. Sharma said that Trai had four suggestions:

1. BharatNet should be in a PPP model. We believe that Aadhaar became successful because of alignment of interests. Everyone in the value chain, everyone was interested undoing more and more enrollments. We need to create a situation where individual entities become stakeholders in BharatNet.

2. The second recommendation which we made is that, while we didn’t have fixed line infrastructure, there is another infrastructure which has come about, which is digital cable TV. India is a country which has digitised the entire cable network. So you have 100 million digital cable TV homes. These, with a little upgradation can be utilised for delivering broadband. 100 million houses will deliver to 500 million people. This is how the world consumes internet. This is how it is delivered in America and Europe. Policy taxation constraints should be removed. We should leverage these pipes.

3. The third is that NTP 2012 talked about an open sky policy. We don’t get bandwidth from satellites. Satellite data cost (in India) is 400 times that of America because of policy. Users cannot directly negotiate directly with satellite providers.

4. Lastly, whatever the level or progress we believe in the community model of public Wi-Fi networks, where a grocery shop sells bandwidth on his hotspot. Because it’ll be able to sell goods also. If there’s no data, you can’t do transactions of the UPI side. What is required is an architecture where this person who is proving Wi-Fi hotspot should not be burdened by customer authentication, money collection etc. We’ll do a proof of concept to see that a person can get seamlessly on a Wi-Fi hotspot without OTP etc. It should be easy to latch on to it wherever you go, and there is a hotspot.

The ever so touchy topic of net neutrality was also mentioned to which he said, “We should understand that Network Neutrality is important in our country so that the Internet can become an open platform, you should have the freedom to get on to the internet. That equality should remain. If you fiddle with the internet as an open platform, you’ll be running around the pipe providers.”

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