The Union Cabinet chaired by the Prime Minister Narendra Modi has given its approval for introduction of steps for promotion of payments through cards and digital means. The move aims at reducing cash transactions. Promotion of payments through cards and digital through means like POS for small and medium sized companies will be instrumental in reducing tax avoidance, migration of Government payments and collections to cashless mode, discourage transactions in cash by providing access to financial payment services to the citizens to conduct transactions through card/ digital means and shifting payment ecosystem from cash dominated to non-cash/less cash payments.
The infrastructure of card/digital payments is growing, but remains modest in comparison to cash payments. For card/digital payments to increase, they should be easy to use, readily available and accepted, should not impose any undue financial burden on the merchant and user, and should offer an appropriate level of security. For better implementation of such digital payments, proper measures similar to debit and credit card processing in Europe and other parts of the world can be looked at and applying them in India.
While the payment system initiatives taken in the form of Electronic Clearing Service Scheme, National Electronic Funds Transfer, Real Time Gross Settlement Scheme etc. have been impressive, the benefits of modern card/digital payment systems are yet to reach all sections of the society and be accepted across the length and breadth of the country.
The introduction of the Payment and Settlement Systems Act, 2007 has resulted in deeper acceptance and penetration of modern card/ digital payment systems in the country, Aadhaar Enabled Payment Systems (AEPS) has been brought to effect to leverage upon biometric verification and a domestic card network namely, RuPay.
The Reserve Bank of India has also recently approved licences for setting up of Payments Banks with the objective of greater financial inclusion by the Payments Banks by providing small savings accounts and payments/ remittance services to migrant labour workforce, low income households, small businesses, other unorganised sector entities.
