Views on facilitating electronic transactions
All transactions can be classified as follows:
All Transactions
Government to
People
Government to
Business
Business to Business
Business to
Customer/Consumer
In order to completely transform the economy into cash less, a broad frame work of
unified payments architecture need to be evolved. One of the key pre requisite to
have a cash less economy is to first make all G2B, B2B, B2C payments electronic. This
would not only help in transaction trails, tax avoidance but also is a key input for
business users to insist their clients/customers to remit only through electronic modes.
However, the present payments architecture may not support this requirement as it is
fragmented viz., NEFT/RTGS, NECS, ACH, etc which also cannot be easily understood
and implemented by small time traders, businesses, etc.
Hence, a new unique business identification system (UBIS) needs to be evolved in the
lines of Aadhar. UIDAI may be mandated to implement this system called Vyapaar to
enroll all the businesses including small businesses, traders, etc. Within the current
Banking system unique account number is a possibility in case of individuals only that
can be identified through debit card numbers whereas, in case of Business accounts no
such cards or very limited cards are issued to select category of businesses. Hence, the
UBIS is a prerequisite for easier settlements and implementation of acceptance
infrastructure across the country.
To build a robust payments architecture, the following are pre requisites
i.
ii.
Unique Business Identification Number
Unique Identification Number for Individuals
iii.
iv.
v.
Unique Bank Account Numbers in the System
PAN number
Mobile number
Going forward, a unified number can be evolved for identification and payments.
Government to People, Government to Business Payments & Government to consumer
collections
The Government should implement an integrated Government receipts and payments
system covering central and all the state governments. There needs to be a single
gateway for all Government transactions made through various electronic modes.
While the possibilities of doing away surcharge for certain Government txns and MDR
on debit cards/credit cards may be worked out, all the cards issued by various banks
may be migrated to Rupay platform immediately and improve the Rupay acceptance
penetration across the country. The Government may work out a suitable card cost
subsidization plan with respective banks to carry out this activity. Simultaeneously, the
government may initiate seeding of Aadhar & UBIN (Vyapaar) numbers against the
mobile numbers and bank account number to explore a model of bill presentment and
payments using mobile technology. The objective is to have a simple yet robust
payments architecture to ensure that even the illiterate can understand easily and use
it without any hassles and apprehensions.
An indicative functioning of the model is provided below.
1. A mobile app platform accessed through various devices be implemented by
Government.
2. The app needs to be integrated with the Aadhar Payment gateway.
3. The bill shall be presented to the mobile number of the purchaser by the
merchant.
4. The purchaser shall confirm through his mobile either through APP or USSD, etc.
5. The confirmation message originating from the mobile number shall be sent to
Aadhar gateway and redirected to bank account that is seeded with Aadhar
number.
6. The bank sends a confirmation on availability of balance to the gateway.
7. The gateway confirms to the app on the status of transaction.
Incentivisation for electronic payments:
It is important to create robust payments architecture, generate awareness through
effective financial literacy campaigns to promote electronic transactions. Hence, at
this stage there is no requirement for lowering taxes to promote epayments. The option
of lowering taxes can be used as a last resort after deploying requisite architecture, etc.
However, to start with the Government may look at disincentivising cash remittances by
levying cash handling cost for all receipts and payments. The banks have already
started levying charges for cash withdrawals through ATMs that may be standardized
across the system. The existing ATMs should be transformed into payment touch points
that can be accessed by any individual with a Rupay card.
The broader issue of businesses in unorganized sectors that do not go through the
formal organised banking system needs to be addressed immediately. The Central and
State Governments need to work in tandem to get all the businesses into the formal
banking ambit. One of the approaches is to make Unique Business Identification
Number (UBIN) mandatory whose details are mentioned above to carry out any sort of
business
Hence, in order to facilitate electronic transactions
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)
Need to have a robust payments architecture
Very high financial literacy levels
Issue Rupay debit and credit cards. Only international travel cards to be
issued in VISA/Master platform till such time Rupay goes completely
international.
Seeding of Aadhar numbers with mobile numbers
Issuance of unique business identification numbers(UBIN) in the lines of
Aadhar
Central and State Governments to work together to bring all the payments
and receipts under a unified payment gateway.
Disincentivise cash payments and receipts by applying cash handling
charges
At this juncture without robust payment architecture, widespread awareness
on payment modes and charges we may not go in for tax based incentives.
Create a unified payments authority who would own and implement this
game changing system. This authority shall coordinate with RBI,NPCI,UIDAI,
Central & State Governments, Mobile Service Providers Businesses and
implement the system. Thereafter, this authority will set policies for payments
in consultation with all the key stakeholders.
With the above approach, in my view all the stated objectives to facilitate electronic
transactions can be achieved.
Viswadeep
Mob:9920925652.
Email:[email protected]