The government has taken several steps to promote digital payments since demonetization. Even after all the hype, figures show that 95% of the dealings continue to be in cash and only 5% digitally.
The government has promoted incentives like the Digidhan mela, cash backs, awards, etc for people using cashless payments. But most of these methods are not sustainable ones. The main reason behind the failure of a cashless society is the lack of a digital trust or a feeling of insecurity with digital payments, especially among the older generation. The digital platform is still not a foolproof one or a completely secured one. Duplication of credit cards and debit cards, cyber attacks, thefts, etc. are very common. The Computer Emergency Response team looks after the security issues related to digital payments. Apart from the trust issue, another major problem with digitization is the lack of Wi-Fi connectivity or internet connectivity in the country. Many villages, small towns, etc. still lack proper and speedy internet connectivity. The DigiGaon initiative is a good step in this direction. Next, the operation of digital payments is also costly. There is a POS charge on the merchant and also an annual fee on the debit and credit cards of the customers. The inter-mobile operability for various mobile wallets in the customer’s and the merchant’s mobile is another issue. The two wallets must be inter-operable to conduct a digital transfer. The new initiative of the government called BHIM (Bharat Interface for Money) solves the problem of inter operability of mobile wallets. With this app, money can also be transferred if one does not have the app. A Payments Regulatory Board under the RBI is proposed to look after the digital payment issues.
The government is also coming up with the Aadhar Based Payment transfer in which there would be an Aadhar pay app. In order to make a payment, the customer can simply enter his aadhar number and use his finger print as the password for conducting a digital payment. In this case, the aadhar would be linked with the bank account of the customer beforehand.
With a proper framework in place, usage of cashless and digital payments can be improved manifold.