Post demonetization, government has given the much-needed push for digital transactions to take-off in a big way. As the first step, the banking regulator Reserve Bank of India, through its division National Payment Corporation of India (NPCI), has built the railroads to set the digital payment system in motion. A.P. Hota spoke to Mint about the road map ahead in terms of awareness, customer protection and Unified Payments Interface (UPI), the most ambitions project of NPCI. Edited excerpts:
What is the infrastructure, or the railroads, that NPCI is building to put digital payments on the fast track this year? What would be some of the changes in terms of newer technologies and regulations?
The railroads that NPCI has built so far are in five broad categories.
The traditional bulk payments system such as NEFT (National Electronic Funds Transfer) and NACH (National Automated Clearing House); the next category is UPI (Unified Payments Interface) and BHIM (Bharat Interface for Money); the third group is Aadhaar Pay; fourth, your e-wallet companies—there are some 26-27 e-wallet companies; and the last one, toll gate payments—the tap and go payments—and Bharat Bill Payment System.
The transactions that have stabilized in the last few years are the older ones such as NEFT. All these categories would total up to 25 billion transactions at the end of this year. Right now, the transactions are around 7-8 billion annually.
You will see at least three times growth just annually. For three times growth of transaction, obviously a good deal of work should be done.
The foundational work has already been done by way of building infrastructure, which is already working. We don’t have to build any new thing. We have to see that in some of the railroads, the membership has to be broadened.
For instance, in UPI, currently there are 44 banks. The number has to be much larger. All the IMPS (Immediate Payment Service) member banks should also be UPI member banks. This is the first task.
Second, tap and go for transit payments—which is still in the pilot stage—should go live in some of the metro centres. Aadhaar Pay, which is still in the conceptual stage, would have to be formally launched. We are planning to launch it in the second week of April.
Although, four or five banks have already launched it in a small way—such as: IDFC Bank Ltd, State Bank of India and Andhra Bank—in the form of closed user groups, the government wants all public-sector banks to be ready with Aadhaar Pay in April itself.
Awareness about digital transactions and its security continue to be a big concern. What are the major things that consumers, banks and fintech companies should do when it comes to digital transaction?
For digital transactions, awareness is key. If awareness is not there, it would lead to security loopholes. The system itself is secure. But if the customer is not aware, it would compromise security.
Now, a large number of people on PMJDY (Pradhan Mantri Jan-Dhan Yojana) have started using PoS (point of sale) terminals. When a merchant gives you the PoS terminal to (verify the transaction), a customer should hide the PIN (personal identification number) while entering it, so that nobody can see it. This is a simple safety measure.
You should not write down your PIN on the card. It is convenient to write it there, but you are taking a big risk by doing that.
If there are calls from people saying that they are from your bank and ask for information such as your card details and PIN, you should not part with that information.
A lot of security awareness campaigns are required. If you see the five or six things that banks should do, they all pertain to security awareness and security tips for users of Aadhaar, (payment) cards, UPI and mobile payments.
Many people have mobiles but they don’t protect it with a password. Security tips have to be given in vernacular languages also, so that they are easily understood by everyone. Everyone should participate in spreading this awareness.
Since a large number of consumers will be entering the digital platform for the first time, a lot of awareness is required.
Government is planning a digital awareness campaign in a big way in April. I am told that it will start on 14 April. I believe a great deal of security awareness is required across the country.
Consumer protection is another concern that everyone is talking about. As retail payments go digital in a big way, fraudulent transaction and charges could be big issues. What are the rights that consumers have when it comes to digital payments?
Consumer education is the responsibility of organisations that provide the service. Consumers have the right to dispute on any transaction. Say, if the consumer has not been given the money on time or if an account is debited but the beneficiary’s account has not been credited.
The Reserve Bank of India (RBI), too, has detailed guidelines for consumer protection. And adhering to RBI’s guidelines on consumer protection is good enough.
UPI is considered to be a game changer for retail transactions. What is the feedback that you have got so far about it?
The feedback on UPI has been good so far. We now have about 20 million downloads of the apps and active users are about 2.5 million.
The people who have been able to do at least one transaction—including non-financial transactions—is about 5 million. Most consumers don’t go beyond balance enquiry.
We are working on how it can be improved. And thankfully, the government in the Union Budget has indicated that this year it will launch a referral programme.
Both consumers and merchants using the UPI would be rewarded and the scheme is being finalized. Quite likely, the scheme would be launched in April.