Make digital payments cost-free to push cash-less transactions: Trai chief
20 December 2016
The Telecom Regulatory Authority of India (Trai) has suggested the elimination of the cost factor in cash transfer models under the digital payments system in order to prevent people from going back to cash payments.
While the shortage of cash and incentives for digital payments help push cash-less transactions at present, people will go back to cash payments unless costs associated with digital payments are eliminated and the present exemptions from charges on cashless payment are not continued beyond 31 March, TRAI chief Ram Sewak Sharma said.
''It should not happen that today we are accelerating it (digital payments) and there are huge incentives that are given… Those incentives must sustain…India is an extremely cost sensitive market,'' Sharma said at an event organised by the Federation of Indian Chambers of Commerce and Industry (Ficci).
''The only inhibiting factor in the long run remains the cost. My suggestion is that they should actually emulate the telecom sector, where recharge of Rs.10 is also done that too digitally and these are financially sustainable…This formula has to be adopted by the financial sector. It is a principle called 'work-done' principle where you compute the charge on basis of work done by the entity.''
According to Sharma, the digital transfer of money from one bank to another should be cost-free. ''The cost, in my view, should be zero or very insignificant. Banks should not look at this as the money earning part. More lucrative is liquidity in the system. If there is cash in system, this will create more profits for the banks,'' he said.
''Cost, Convenience, and Confidence are crucial factors for a successful Digital Payment System implementation in India,'' Sharma said at a seminar on `Demonetisation to Digital Remonetisation'' held at FICCI, Federation House.
FICCI organised an ICT policy dialogue with the agenda to discuss the challenges and opportunities that lie before the ICT sector, government and the regulators following the demonetisation move. During his address Sharma highlighted the pillars of Digital India and mentioned the need of an effective Digital Infrastructure, and how availability and affordability of digital solutions formulates the base of Digital Remonetisation. The Trai chairman highlighted how JAM Trinity creates a robust system within India, which further creates a digital inclusion with 1.1 billion Aadhar users across India.
Sharma recommended that, in order to create a well operational and sustainable digital and cashless economy, it is vital to eliminate convenience charge by the banks. He firmly suggested that interoperatable or interlinked digital wallets can additionally support the digital payment systems of India.
Among other recommendations, the Trai chairman also mentioned that the implementation of Bharatnet will be faster and effective with PPP model, and further combined with Digital Cable Television System, India will reach a new level of digital connectivity.