India's financial system is in a flux and the leap-forging of financial technologies could render ATM cards and PoS (point of sale) machines redundant by 2020, NITI Aayog CEO Amitabh Kant has said.
Speaking at the opening session of Pravasi Bharatiya Divas conclave in Bangalore on Saturday, Kant said the new Aadhar-enabled technology would help people make transactions using mobile phones in just 30 seconds.
"India is in the midst of a huge disruption in the world of both financial technology and in terms of social innovation. In my view, within the next two-and-half years, India will make all its debit cards, credit cards, ATM machines and PoS machines totally irrelevant," he said at the 14th edition of the three-day Pravasi Bharatiya Divas.
"In the next two-and-a-half years (by 2020), India will make all its debit cards, credit cards, all ATM machines all POS machines totally irrelevant," Kant said.
He said cards and swiping machines will lose their relevance as Indians will be using Aadhar-enabled technology for transactions as this only needs a mobile phone. The transaction would also be done in just 30 seconds, he added.
"India has created a back end in terms of biometric which will enable India...," he said, highlighting recently launched BHIM app and Aadhar enabled payment system initiatives.
"Due to demonetization, there is a huge push towards digital payments. India is the only country in the world with a billion mobile connections and a billion biometrics," he added.
Kant said the demonetisation measure was necessary for bringing the formal economy to the fore in a country where more than 85 per cent of transactions is in cash and only a few of its over 1.25 billion population pay taxes.
He said whatever the biggest attempts of demonetisation and push for digital payment, only 2 to 2.5 per cent of Indians pay taxes, so India needs to move from a non-formal to a formal economy.
"It is impossible for India to become a $10 trillion economy when $2 trillion is a formal economy and the rest is an informal black economy. But through the adoption of digital payment, we can grow per capita income to about $4,000 from $1,532 currently, by 2032."