In India , there are approx 73 crore Plastic cards in use ,
out of which , some 69 crore are Debit cards ( including RuPay cards )
90 % of the Debit cards are used for withdrawing cash from ATM
Of course , both type of cards can be used for
purchases, by swiping on Card Swipe machines or
Point of Sales ( PoS ) machines, of which , we have some 1.44 million in current use
To encourage non-cash transactions , NDA government ,
yesterday asked banks to order some 1 million ( 10 lakh ) card swipe machines and ensure that these are
commissioned by end March 2017 ( next 100 days ? )
At an average price of Rs 10,000 each , this order will
cost Rs 1,000
crore !
Even assuming that banks have no problem in respect of
incurring such expenditure , there is just no way , companies manufacturing
these machines can manage to produce 10,000 machines EVERY DAY , for the next 100
days ( when their current rate of production is barely 10,000 machines PER MONTH ) !
May be , they will manage to deliver in 300 days !
But that is not the issue .
The issue is :
Someone in the NDA government is working at " cross purpose
" with the government's avowed goal to make AEPS
( Aadhar
Enabled Payment System )
integrated UPI mobile wallet , as THE FOUNDATION
of going Cash Less ( or Less Cash )
This was stated by none other than Shri Amitabh Kant
, CEO - NITI Aayog , 4 days back
He is working double-time to launch UPI based (
AEPS integrated
) mobile wallet by end of this month , as an ANSWER to mobile wallets of Paytm /
FreeCharge / Mobiquick / PayU / ItzCash etc
No one knows it better than Shri Kant that the illiterate
Indians in rural areas find it VERY DIFFICULT to
use Credit / Debit cards , what with the accompanying complicated process ,
requiring remembering / typing of PIN and Passwords and changing now and then
In my earlier blog / email , I have suggested that UPI based mobile
wallet be made UTTERLY SIMPLE , where , the Buyer and the Seller , only need to
look
into the smart phone camera ( for respective bio-metric identifications ) ,
then just SPEAK
( in their language of choice ) , their respective Aadhar Numbers and the PAYMENT AMOUNT
That's all !
It is time we leapfrog the Jurassic Age of Credit / Debit cards
and straight away jump to the age of " Speech Enabled Mobile Wallets " , much
in the way rural Indians bypassed the " Age of Landlines " and
jumped to " Age of Mobiles "
Following is another example of someone / somewhere , working
at " Cross
Purpose "
A report in Hindustan Times ( 07 Dec 2016 ) says following
, with regard to the forthcoming Union Budget :
----------------------------------------------------------------------------------------------------
INCENTIVES are likely to merchants promoting use of PLASTIC money
and TAX
BENEFITS could be offered to those making electronic payments
" We will put in place, several measures to push
the use of DEBIT
and CREDIT cards and also encourage digital payments " ... a
finance ministry official told HT
The ministry could also come out with a Pradhan Mantri
Jan Dhan Yojana-like scheme to spread the use of DEBIT cards , especially among
the RURAL and SEMI-URBAN areas
Merchants , especially those running small businesses ,
would be encouraged to acquire PoS ( point of sale ) machines to facilitate payments
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Threatened with a certain " obsolescence
" within next 2 / 3 years , at the hands of the privately branded Mobile
Wallets as also, the soon to be launched , UPI / AEPS linked ( and Speech based )
Mobile Wallet , it is not surprising
that the existing Card Issuing companies are working overtime to convince the Government :
# To grant some
" Incentives
" to MERCHANTS , who accept card-based payments
through use
of Card Readers
# To grant some
" Tax
Benefits " to those making electronic payments
I am all for granting such " Incentives
" and such " Tax Benefits " , but I urge the government to do so only in respect of
BUYERS and SELLERS , using UPI / AEPS based Mobile Wallets , and NOT to users of CREDIT / DEBIT card
My argument is simple :
If Government extends these Incentives /
Benefits to Card Users , then UPI / AEPS based mobile wallet will never take off !
No
competition is precisely what those Card Issuing companies want !
For them , such budget announcements , would be "
Manna from the Heaven " !
It would enable them to survive , riding piggy-back on government
incentives ( - nothing more than a " life support system " for a terminally ill
patient , who should be allowed a dignified EUTHANESIA ! )
Please remember ,
A UPI / AEPS integrated mobile wallet ( really , a
mobile app ) can be easily configured for following functionalities ( apart
from SPEECH and TRANSLATION
) :
#
Instant transmission of " Transaction Data " to servers of IT
/ ED / anyone else
#
Co-relation of total transaction values for a accounting year with IT
return filed by a
merchant
#
Deduction of GST and depositing into appropriate accounts of Central /
State
governments
#
Crediting into the Jan Dhan accounts of the BUYERS and the SELLERS ,
those
INCENTIVES / TAX BENEFITS ( expected to be announced in forthcoming
budget )
# As suggested by me earlier,
crediting a small percentage of GST amount into,
* EPF account of the BUYER ( if he already has one )
* PPF account of the BUYER ( to be created automatically , by
Mobile App )
We have a work force of some
486 million , out of which only 30 million are working in
the Organized Sector, with balance 456
million in Unorganized Sector
I believe most of these 456 million , do
not have any EPF / PPF account
By implementing
my suggestion, we will ensure that our entire work force gets covered
by a POST RETIREMENT SOCIAL SECURITY , without
imposing any big financial burden on
the government
In itself , this suggestion would INCENTIVIZE all buyers ( no matter , how small a
purchase value ) , to effect payment ONLY through
UPI / AEPS mobile wallet !
With every purchase made , using his UPI / AEPS mobile app , his EPF /
PPF , keeps
growing !
And the interest earned on PPF is TAX FREE !
SUPPORTING FACTS :
*
All mobile wallets put together , are expected to grow from current 20
crore to 65 crore
by 2020 ( 3 times ) , and mobile
wallet based transactions will go up 5 times !
* One million new e-Wallet users
are joining EVERY DAY
, since 09 Nov !
* 72
% of internet accessed in India, happens on Smart phones ( against world ave of
50
% )
* On Sept 29 2016 , RBI had issued a circular stating that
Aadhar-enabled PoS terminals
were to be mandatorily installed
by January 2017
Yesterday , RBI deferred this
implementation to June
2017 , since " the capacity to
produce such machines is scarce
"
Manish Patel , founder of Mswipe ( which deploys mobile PoS terminals ) says :
" There is no clarity as to
how the transaction will flow . Will the customer need to swipe
his card or punch in the Aadhar number ?
Or , will biometrics act as the second factor of authentication ?
Unless these intricacies are cleared, PoS manufacturers cannot develop Aadhar-enabled
PoS machines within the deadline "
Dear Shri Kant :
Please help the CARDS fade gently into the night !
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08 Dec 2016
www.hemenparekh.in / blogs
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