My daughter had selected a dress for herself from alocal shopping outlet. She handed over the account number of the vendor to mefor depositing the bill amount. I offered her cash to pay the bill, but sherefused saying that the vendor doesn’t accept cash payments. She insisted totransfer the amount in the given account number and also asked me to forward ascreen shot of the payment once done.
I was a bit surprised. When I started transactionthrough mobile banking mode (mPay), I found a noticeable instruction – ‘No CashTransaction Allowed’ – in the vendor’s account. It was something that people,especially local businesses usually don’t like as they have love for cash. Iwas made to do another transaction through mPay which was ‘mandatory’ to placeorder for a commodity. The vendor had displayed that only mobile bankingtransactions would be accepted for placing orders.
What I am trying to convey is that the nature offinancial transactions in day to day purchases is changing fast. People arefast shifting to digital mode and are losing love for the carryingphysical cash. One of the most significant things observed in the past 2 – 3weeks ensuing Eid-ul-Fitr was the display of massive digital transactionsconducted across the spectrum of merchant establishments (MEs) in the Kashmirvalley. People, irrespective of their status, mostly used digital modes ofpayment for purchase of goods. During the course, debit card usage was at itspeak.
The best part was that the merchant establishments,big or small, were proactive in accepting payments electronically from theshoppers. Contrary to earlier trend where most of the MEs used to hide Point ofSale (PoS) machines from their customers and forcing them to pay in cash, itwas delight to watch these MEs displaying PoS facility and encouraging digitalpayments. Besides PoS, people were fearlessly using mobile banking facility topay their bills against the purchased goods and services.
The tremendous push observed in digital transactionswas not done conveniently. It was demonetization in November 2016 whengovernment made high value currency notes of Rs.500 and Rs.1000 invalid whichat that time constituted almost 86% of the total currency in circulation. Inabsence of cash, people were forced to use whatever digital payment modes wereavailable to them even for their routine matters.
Not only this, banks too were made to pursue toupgrade their technology and encourage digital transactions.Pre-demonetization, the banks, more particularly the public sector banks andold generation private sector banks, were very conservative in extendingdigital services to their customers. After computerization of bankingoperations which began in early nineties and later shifting to advancedplatform of core banking solution, these banks were hesitant to allow theircustomers access to electronic services. It was extended as a special favor tofavorite customers.
Post demonetization, the scenario in the bankingindustry has radically changed. Not only the banks unveiled electronic serviceswhich were already in their product basket as rotten eggs, we also witnessedinnovative technology drive cashless transaction facilities extended to thecustomers. The banks are continuously engaged in upgrading their ITinfrastructure to match the market needs – a robust network having lighteningspeed and simultaneously ensuring security in transactions.
Meanwhile, the Reserve Bank of India (RBI) is pushingfor a 34 per cent increase in PoS (point of sale) terminals to 50 lakh inmerchant establishments, mainly involving 44 per cent of total debit cardtransactions, in the next two years while aiming for “cash-lite economy” anddigital modes for e-commerce.
In its report on ‘Payment and settlements systems inIndia: vision 2019-2021’, RBI says digital PoS (QR code) is also expected toincrease substantially and the total card acceptance infrastructure will beupscaled to six times present levels by end 2021
Notably, there are 37.22 lakh PoS terminals in thecountry as of now. The total value of PoS transactions through debit cards inthe year ended March 2019 amounted to Rs 593,475 crore as against Rs 460,070crore in the previous year, an increase of 29 per cent.
PoS transactions through debit cards were just Rs329,907 crore in March 2017. PoS transactions using credit cards jumped to Rs603,348 crore in March 2019 from Rs 327,878 crore in March 2017.
Precisely, mass movement of people towards digitaltransactions is building up. A close coordination between the networking &IT infrastructure companies and banking sector is inevitable to seea safe and secure digital ecosystem for financial transactions.
(The views are of the author and not that of theinstitution he works for)