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RBI’s payments system vision document foresees ‘cash-lite’ society

Digital transactions in India will grow four times in 2 years, expects the Reserve Bank of India. The central bank, which came out with a vision document ‘Payment and Settlement Systems in India: Vision 2019- 2021’, is aiming to have a ‘cash-lite’ society in the country through an ePayment system that is safe, secure, convenient, quick and affordable. The document visualizes the total number of digital transactions to reach 8707 crore by December 2021 from 2069 crore in December 2018.

The document lists 36 specific action points and 12 specific outcomes that will lead to a ‘highly digital’ and ‘cash-lite’ society “through the goal posts of competition, cost effectiveness, convenience and confidence (4Cs)”.

 It also expects accelerated growth in individual retail electronic payment systems, both in terms of number of transactions and increased availability.

The document expects that payment systems like UPI and IMPS would register average annualized growth of over 100%, and NEFT at 40% during2019-21. There will be a 35% growth in the use of digital modes of payment for purchase of goods and services through increase in debit card transactions at point-of-sale terminals during the vision period, says the document. Use of debit cards in PoS transactions is expected to be around 44% of total debit card transactions.

The document, however, states that while no specific target is considered for cash in circulation, the enhanced availability of PoS infrastructure is expected to reduced demand for cash and thus, over time, achieve reduction in Cash in Circulation as a percentage of GDP.

RBI emphasizes that the payment systems landscape will undergo vast changes with further innovation and entry of more players, which will ensure optimal cost to the customers and freer access to multiple payment system options.

The document states: “While the approach of the RBI will continue to be of minimal intervention in the pricing of charges to customers for digital payments, all efforts will be made towards facilitating the operation of payment systems which are efficient and price-attractive.”

It also states about creating customer awareness, setting up a 24X7 helpline and self-regulatory organization for system operators and service providers, among others. The aim, it states, “is to enhance customer experience, empower payment system operators and service providers, enable the payments ecosystem and infrastructure, put in place forward-looking regulations and undertake risk-focused supervision.”

Among other points mentioned in the document are: card-based transactions will see a six-fold increase in the next three years; ‘cash-on-delivery’ method, which currently makes for the most significant transaction method by customers, will reduce in this time; increase in the transaction limit and extension of the duration window for NEFT and RTGS transactions.

The regulator is also proposing a universal payment solution for users without internet and smartphone. “Though mobile internet speed has risen, connectivity issues remain unresolved in large areas. Therefore, providing an option of offline payments through mobile devices for furthering the adoption of digital payments shall be a focus area during this Vision period,” it said.

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