Different ways of Cashless Transactions
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TOPIC:
General Studies 2
- Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
General Studies 3
- Awareness in the fields of IT
India has seen a dramatic move in terms of demonetisation which is going to play a significant role in history of economic development of the country. The demonetisation has brought in the foreground the different means through which the common man can do cashless transactions. They can leverage multiple options such as:
- The first and the most convenient step in initiating cashless transaction is using the bank account in multiple ways.
- Internet banking
- Usage of cheques
- Transfer money through net banking/RTGS/NEFT
- Banks are now providing bank mobile wallet services. It can be utilised to connect mobile to bank and thereby furnishing funds by mobile wallet through bank account.
- Various private mobile wallet service providers are also available. They give option of linking wallet to bank account and money thereby can be transferred to such wallets and utilised.
- Use of plastic money such as Credit card, debit card and ATM cards. They can be used for physical as well as online transactions. For them, secure websites and POS machines are maintained by vendors to facilitate their use.
- Government of India has also come up with transformative mobile platform called as Unified Payment Interface- UPI. Through this platform, the person can transfer money from his account to other person’s account directly, provided both are connected to the UPI.
Those who are not connected digitally must first open a Bank account number. The person can start learning digital transactions by using ATM cards, then credit and debit cards and then focus on mobile as an instrument to make payments. In this way, all will be able to leverage the advantages of e-payments. Thus, variety of alternatives for digital platforms are available to make digital payments more inclusive.
The government has announced that people using digital medium to book railway tickets, pay insurance premiums, fuel payments will be given incentives. This is right step in right direction as it encourages to save money (no need to pay extra round off figure) and also in direction of broader digital payments. The thing missing is that the mobile platform is not yet considered a legal platform to transfer money. It is in the sense that no law is passed in Parliament which legalises such mobile payments and thus it becomes just a contractual payment. Now there is a need for such forward looking framework to have a legislation that supports mobile payment platforms. Today, 67% of Indian online users access internet only through mobile phones. Once the mobile is targeted, there is a potential to reach to the most rural areas of the country.
Safety of the stakeholders
The Banks have the KYC forms of the customer to give them banking services. Similarly, the mobile wallets also provide certain information (username and password) which is unique in nature to each customer. This gives the common man a leverage with bank account as well as mobile wallet service providers. During the transaction, the bank, mobile wallet service provider and customer are interacting through safe and secured medium. The chain is well established and no confusion/doubt over identity of the user and the transaction persists.
However, India needs to do lot more to make mobile payment ecosystem secured. While RBI has taken leadership and mandated certain parameters for information security, Aadhar has emerged as a more significant platform with personal information of 107 crore people. It is unique methodology to engage in participative governance with citizens and use Aadhar mechanism for promoting digital payment and mobile payment. But there is need to make mobile and banking transaction safer. The existing framework does not effectively provide for effective remedies and redress mechanism for customer protection in case of any fraud. If customer feels it is not secured, the medium may not be used and the whole idea of becoming digitalised may not be successful.
Thus, there needs to be dedicated approach to have cyber security in place which determines rights and duties of all stakeholders and effective remedies to all stakeholders who potentially could dispute coming up in advent of increase in cyber crime.
Cyber insurance it is a nascent area where lot of work should be happening in next 12 months. It will provide relief to victims of cyber crime in digital payment ecosystem. Today no such mandate covers for cyber insurance. Additionally, the customers will also be covered under IT Act 2000 as dealing, handling, maintaining personal information data including financial data is mandated under it. But that may not be enough considering ever increasing scope and space of digital world.
Conclusion
Customer wants their money to be secured, comfort of financial transaction ecosystem, and reassurance that problems will be redressed and help will be provided whenever needed. The initial steps have been taken, however, it is a long way forward towards digital payment.
Connecting the dots:
- What is digital payment? What are various means and ways available to access it? In case of breach of security, what are possible solutions and precautions available? Examine.