IT Minister RS Prasad says digital transactions will touch Rs 4 crore per day, but there are many hurdles

Digital transactions are growing and is expected to increase by 33 percent to Rs 4 crore per day this year, IT Minister Ravi Shankar Prasad has said. “Digital transaction was Rs 1.85 crore per day in 2015. It was Rs 3 crore per day in 2016. It will be Rs 4 crore this year,” Prasad said while addressing an event organised to commemorate the World Consumer Rights Day. To encourage e-transaction, he said more common service centers (CSC) will be set up for payment of utility bills through debit or credit cards.


“We have set up 2 lakh CSC. We will take (the number) to 2.5 lakh this year,” he added. With growing number of e-transactions, Prasad said there is a dilemma how to strike a balance between maintaining privacy of data and at the same time using it for providing better service.

He was speaking on the theme ‘Consumer rights in a digital age’. Consumer Affairs Minister Ram Vilas Paswan, Minister of State for Consumer Affairs C R Choudhary, Consumer Affairs Secretary Hem Pande, Nasscom President R Chandrashekar were among others present at the event.


The use of digital wallets and electronic transactions saw a spike after the demonetisation of high value currency notes. However, after the re-introduction of cash in the economy, people seem to have gone back to their old habits. The statistics released by the RBI shows that while cashless transactions were steadily increasing till the month of December, there was a drop in volume in January and February. While electronic transactions may have seen an increase because of lack of other options, removing cash from the system is not a shortcut to pushing India to a cashless economy. Policies, regulations, and dissemination of information have to continue for India to achieve the transformation.

The Government wants to make plastic cards irrelevant by 2020, depending instead on mobile phones and biometric security for authenticating transactions. The problem is that there are few measures to protect users from loss of money in digital transactions. Moreover, biometric security is not foolproof, and while the Government claims that the Aadhaar data is watertight and completely secure, policy advocates prefer smart cards as they can be replaced when compromised. Biometric data, once compromised, remains compromised for life. Rushing towards a cashless economy without adequate preparation is a major opportunity for fraudsters. There are no prescribed security standards for e-wallets in India.

There are few regulations for recovery of money lost in electronic transactions.
There are few regulations for recovery of money lost in electronic transactions.

The government has introduced a number of platforms, technologies and applications to encourage cashless transactions. The Bhim app allows for direct bank to bank transfer over many payment modes, including a UPI pin, banking codes, phone numbers and QR Codes. Bharat QR allows for a single QR code generation for storefronts, instead of multiple ones for different applications. NUUP allows for electronic fund transfer over feature phones or without the need to install applications on smartphones.

Payment Authentication through biometric scanning. Image: Narendra Bhooshan Twitter: @nbhooshan
Payment Authentication through biometric scanning. Image: Narendra Bhooshan Twitter: @nbhooshan

The Aadhaar Enabled Payment System allows for payments to Aadhaar linked bank accounts through Aadhaar numbers. Aadhaar Pay for merchants is meant for remote and rural areas where shoppers can execute electronic transactions without the need for plastic cards or smartphones, and without transaction charges for either the shopper or the merchant. Aadhaar Payment Bridge (APB), which is popularly known as DBT allows for the direct disbursal of benefits, and was recently used to provide subsidies to one million farmers in Karnataka.


The prolific output in technologies is being accompanied with on ground programs around the country to encourage cashless transactions, and provide training to the people and merchants on how to use the various options available. There are also daily and weekly lotteries for consumers and merchants for making purchases using electronic transactions, and Niti Aayog has disbursed over Rs 153 Crore as reward money through the NPCI so far. The programs by the NPCI and Niti Aayog are scheduled to continue till April 2017.

The UTS app only supports payment through the Paytm plastic card gateway
The UTS app only supports payment through the Paytm plastic card gateway

While the Bhim App has been installed on over 17 million devices, the users are let down because of lack of integration on e-commerce platforms. The Bhim app cannot be used to make payments on Flipkart and Amazon. There is lack of ability to move money to and from mobile wallets, such as Paytm. The Bhim app does not even work with the Government’s own digital services, such as the IRCTC. To purchase local railway tickets through the UTS app, users have to use third party payment gateways such as Paytm, where payments through Bhim or UPI would have been a convenient option.


While there has been a steady increase in cashless transactions, there are several significant reasons the government may not hit its own targets. Only about 10 crore of the 111 crore Aadhaar cards are linked to bank accounts, which goes to show that most Indians still do not have a bank account. The government wants to do away with plastic cards, but government services allow electronic transfers only through plastic cards. Most of the country still accesses the internet over spotty 2G connections. Policies and regulations need to be introduced for new modes of transactions. The government needs to speed up adoption of the payment platforms and back end applications it has introduced. Promotion schemes and on ground workshops need to continue on a sustained basis to give India more of a chance at transforming into a digital economy.

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