Nilekani with his 13-member committee will undertake steps to encourage more people to use digital payments.
BJP-led Narendra Modi government has roped in Nandan Nilekani, former chief executive Infosys, to help boost the process of digital payments in India. Following the recent demonetization of old Rs 1,000 and Rs 500 notes, people are gradually moving onto the digital and cashless economy and the Modi-led government is now seeking help of Nilekani and his 13-member committee to push digital payments in India.
Nilekani, now a member of the Congress party, was also the Chairman of the Unique Identification Authority of India (UIDAI) and recently spoke in favor of demonetization saying that the “shock given to the currency” will boost digital economy. According to Nilekani, the “need of the hour” should be “cashless payments to merchants” which will further accelerate the growth of a digital economy in India. Having Nilekani onboard the committee to boost digital payments in India could work in favor of the government given that the entrepreneur has previously handled the large-scale national level project of biometric-based Aadhaar unique identity program. Aadhaar card, which is required for bank accounts, LPG subsidy, PF, and more, is currently being owned by close to 92 percent of India’s adult population.
Reach of the unique identification program, which kick-started in 2010, has been able to penetrate even in rural sections of the country where the newer modes of digital payments such as credit cards, debit cards, or e-wallets, is yet to seep in. Last week, it was announced that Aadhaar cardholders would soon be able to use their cards to credit or debit money. For this, cardholders need to enter their Aadhaar ID number and go through a fingerprint or iris scanner verification for electronic transaction. Ajay Bhushan Pandey, CEO of Unique Identification Authority of India (UIDAI), assured that there would be utmost privacy for all Aadhaar-related transactions. The Aadhaar card can be linked with bank accounts and the Aadhaar-Enabled Payment System (AEPS) can be used for funds transfer, balance enquiry, cash debits, credits etc.
According to NITI Aayog CEO Amitabh Kant, a separate app for Aadhaar cardholders is also in the making that is further expected to make digital payments easier for those who do not own a credit or debit card. The purported app is said to debut in the coming week and would allow mobile phones with external or in-built retina and fingerprint scanners to allow the transactions. Kant further added that mobile manufacturers will be asked to include biometric authentication systems in mobiles made in India.
Meanwhile, Nilekani’s 13- member committee, which comprises of the Chief Ministers of Andhra Pradesh, Madhya Pradesh, Maharashtra, Puducherry, Odisha and Sikkim and the CEO and Vice Chairman of NITI Aayog and other experts, is expected to undertake initiatives which include massive educational campaigns at the grassroots level to popularize digital payments and making these alternative payments methods more accessible.
In India, there are about 250 million smartphone users; however, there are close to 350 million who own feature phones while another 350 million don’t have a phone at all, Nilekani said. For each category of citizens, there needs to be a different strategy in place that will bring everyone together on the digital payments platform at the same time. The 13-member committee recommends changes to the existing e-payments apps in India which could adapt to the interface of feature phones. Yet, the massive challenge remains to bring those 350 million people who do not own phones and are digitally illiterate. The committee plans to draw those who are enrolled in Aadhaar, and enlist the remaining toward microATMs promoted by large Indian lenders such as IDFC Bank and startups like Novopay which already have a presence in 130,000 village retail outlets or kirana stores.
The Modi-led government will also bring in four new options for cashless payments which include Unstructured Supplementary Service Data (USSD) for GSM phones, e-wallets and Unified Payments Interface for smartphones, and debit, credit and prepaid cards for PoS machines.