Technology,governance innovation and the pandemic

 "आज मध्यरात्री यानी 8 नवम्बर 2016 की रात्री के बारा बजे से.... वर्तमान मे जारी 500 रुपये और 1000 रुपये के currency notes ....legal tender नही रहेंगे.... यानी ये मुद्राये कानूनन अमान्य होगी। " You remember this speech given by our beloved prime minister modiji, I'm sure you know. Shocking decision na ,what do you think? I am not going to talk whether it was a masterstroke or a big.. big blunder,but I'm pretty sure that this move brought a boom in one industry that is digital payments industry. So in this blog we are going to review the performance of electronic retail payments system in our country, that is INDIA. 

Before getting started i want to give you a brief idea about digital or electronic payments ,So let's begin.

First what is digital payment?
Digital payment in layman terms is
A way of payment which is made through digital modes also called electronic payment.
Modes provided:
1. Internet Banking
2. Mobile Banking
3. Mobile applications
4. Card based transactions
Throughout the years these methodes kept evolving and evolving too. It started from NEFT,RTGS era decade ago,now it's time of UPI and card payments. Let's take a ride of different methods of electronic payments in simple terms and frankly speaking I'm just giving names here.If you want a special blog me explaining these methods let me know in comments section.
• NEFT ~national electronic funds transfer
• RTGS ~real time gross settlement
• Card banking ~ through ATM, credit,debit , travel cards
• USSD ~ unstructured supplementary service data (i.e. *99#)
I'm telling you *99# is a real gem.
• AePS ~ adhar enabled payment service
• Mobile wallets ~ e.g. paytm,freecharge,phonepe,etc.
• Internet banking
• Mobile banking
• PoS ~ point of sale
• IMPS ~ immediate payment services
• UPI ~ Unified payment interface (the gamechanger)

Now i think you have a good idea about what is digital payment and what are the various way to transfer money through electronic modes.
#Regulating bodies :-
All above stated payment ways are regulated either by RBI (reserve bank of india) or NPCI (national payment corporation of india).They provide infrastructure for the smooth conduct of these services through banks.Some examples of NPCI platforms are UPI, IMPS, AePS, BHIM, RuPay cards, NETC , bharat billpay,etc.RTGS and NEFT are regulated by RBI.
Let's take a look at the graph given below,it is about the retail payments took place on various NPCI platforms.

* Data for plotting graph taken from RBI website and is authentic

From the graph it is evident that we have seen an exponential rise in e payments especially from fy 2016-2017. Here fy does not stands for first year,it is fiscal year aka financial year. But hey friend did you find this curious ,about how this happened ? Don't worry I will explain.

• Push through government policies

With very fascinating campaigns like digital india,cashless india in early 2015 , the central government invested heavily on technology and creating an ecosystem for innovation.With slogan of ' power to empower' the Digital India programme is a flagship programme of the Government of India with a vision to transform India into a digitally empowered society and knowledge economy.
“Faceless, Paperless, Cashless” is one of dimension of Digital India.These campaigns led to uprise of healthy infrastructure for digital economy.Thus the stage was ready for investers and entrepreneurs in this field of economy.

• Demonetization. 

In November 2016 surprising the whole country modi govt took a decision to ban the 500 and 1000 Rs notes . Around 86 % of cash money was present in the form of these notes at that time.All were forced to deposit there whole cash in banks,this led to a less cash society as all the money was in banks.Due to scarcity of new notes most of the ventures,shops, companies selected digital payments for transfer of funds.

• Internet penetration

Surprise! Surprise! Its 2016. On 5th September mukesh ambani launched his JIO platform giving all Indians free calling,sms and yes freee 4g internet.We indians are very attracted by 'free '. This decision shocked all the current rivals of jio like bharti airtel,idea,etc.The race to serve cheaper internet ended on giving 1 GB 4G internet at a price less than 1 liter water.Yes it's damn true that internet in our country is cheaper than packaged water.
India is 2nd largest user base of internet in world with over 40 % internet penetration just behind USA and china. Availability of internet gave the upper hand for internet banking.

• Role of Smartphone

According to market research firm techARC, India had 502.2 million smartphone users as of December 2019.This is huge.With the availability of various 3rd party applications enabling UPI ,card payment and mobile wallets over the years grew tremendously.Also internet access too improved resulting in mobile banking.

• Offers and cashback

With entry of tech giants like google,amazon,walmart in the field of e payments , competition got spiked.Everyone was trying to establish themselves as the best and this was in consumers benefit. Don't shy i know you also blackmailed your bestie to sign up in Google pay with your referral link.Chalta he yar dost isliye hi to hote he.Coming back to the point,this 'offers and cashback' scheme of apps like paytm, phonepe,google pay, Amazon pay and many others attracted more and more users.And industry grown humongously.

• Quick , Easy and efficient bill payment

With introduction of BHARAT BILLPAY system by NPCI all the pending bills of electricity,water, mobile recharge,and many more became so easy that you can pay them with just moving tip of your finger and boom .No lines ,no waiting , quick and efficient also you will get cashback.

One major benefit of digital payments is that they are transparent and chance of curroption is very negligible.Now it seems you are clear now how this industry got such gigantic stride.Now let's take a look at some issues regarding digital payments.

1. Online fraud

As all digital payments takes place with help of usage of Internet and smart devices,there is greater chance of being cheated.Do not enter your card details,OTPs, password anywhere on anonymous sites.

2. Personal data security

Data is the new oil .We are the largest democracy in the world and i feel very embarrassed when i see that there is not a single dedicated and comprehensive law on personal data protection in india. Recently government banned 59 Chinese apps for threatening the country's 'sovereignty and integrity'.Instead of applauding this temporary move my friend we have to raise our voices for a permanent solution that is personal data protection bill,which is tabled since 2018.Tiktok,reels ko apni apni jagah rehne do,mere blogs padh ke jara gyan badhao.
3. Rural involvement
E payments are not that popular in rural areas like they are in cities.A proper knowledge of this system should be given with required infrastructure .Mahatma gandhi ji once said 'खेड्याकडे चला'। this is the time .

*Impact of covid situation :-
With over 50 days of lockdown started on 25 march , digital payments saw ups and downs throughout the months.Before pandemic struck UPI payment which makes most of the digital payments shown a gradual increase. In April it abruptly declined as all economic activities were shut but this was the most reliable way of money transfer during the lockdown. As in mid may markets started opening ,UPI also started gaining momentum and in the last month of July it broke all the previous reacords of UPI system.

* Data taken from official npci website and is authentic.

Reasons behind this record breaking performance is simple that people are afraid of transacting with cash as they bear chance of transmitting coronavirus.Digital payment industry is one of the few who got advantage of pandemic.There is space for tremendous growth in this sector and it has became major contributor in India's economy.Lets hope it continues it's glorious run because our aim is one and only one : India at the top
This is it for today friend and  if you

have any query or question feel free to ask in comments.Cool ? Cool !

🇮🇳Jai hind,vande mataram🇮🇳

A blog by saurabh vishwanath mardhekar.