Banking should become as easy as making a mobile phone call and this year could see digital payments take off in India in a big way with the entry of telecom companies as payment banks, said R.S. Sharma, Chairman of Telecom Regulatory Authority of India.
A low-cost model would attract even those at the bottom of the pyramid to digital payments and banking, Mr. Sharma said. “My belief is that if you can have banking at very low cost, similar to what you have for mobile top ups in the telecom space (for prepaid sim cards)…whose average value is Rs 10,” Mr. Sharma told The Hindu.
This, he said, is now possible with the Reserve Bank of India (RBI) recently issuing payment banks licenses to 11 companies, many of whom are telecom companies that have experience of handling transactions, which are low in value and large in volume.
“The Prime Minister has also said on number of occasions that mobile should become a tool of empowerment and it is indeed a tool of empowerment. People can get government services and information…If someone needs to pay Rs 100 to their grocer, they should be able to just take out the phone and pay,” he added.
Bharti Airtel, Vodafone, Reliance Industries and Sun Pharma promoter Dilip Shanghvi who is partnering Norwegian telecom player Telenor, are part of the eleven licencees approved by the central bank in August 2015. They have eighteen months to commence operations and many are expected to start this year.
Mr. Sharma, who had earlier worked with Infosys co-founder Nandan Nilekani at the Unique Identification Authority of India that is implementing the Aadhaar project, said banking would not become ubiquitous unless you drive down the cost and this can only be done through digital mobile banking, using Aadhar as a factor of authentication.
“I am looking forward to every person being empowered by mobile handset in his hand to do all kinds of transactions from that mobile. Banking should become so ubiquitous….it should become as easy as making a phone call,” Mr. Sharma told The Hindu.
Mr. Sharma said that the problem in the digital world is that of establishing an identity which can be solved by using Aadhar as it can help do a secure transaction at a very low cost.
“RBI requires two-factor authentication for any transaction... either what you are (biometrics) and what you have (mobile phone, debit card) or what you know (user name and password) and what you have,” he said.
“Mobile phone manufacturers are now putting iris authentication into the device…And I think UIDAI is doing proof of concept. This is basically mobile phone (what you have) and iris (what you are). So in single click you can do the transaction,” Mr. Sharma said.
Backing the government’s stated intent to promote cashless payments, which includes a mandate to switch all central government receipts and payments to paperless form by the end of 2016, Mr. Sharma said there could be some incentives for doing transactions on the Internet.
“For example, in IRCTC (the Indian Railways’ booking website), when you make an online booking you pay Rs 20 more compared to when you go to a counter. This should be reversed actually,” he added.
“Digital transactions must be promoted, which Finance Ministry and the RBI are doing… Regulators and stakeholders from the technology space, the ministries are all working in tandem. We are actually on the cusp of our real digital revolution in some sense,” Mr. Sharma said.
Asked if the Telecom Regulatory Authority of India is working with the RBI to push forward the digital payment ecosystem, Mr. Sharma said both institutions will work in tandem wherever required.
The TRAI chief expressed confidence that the country’s telecom sector would get a big boost from the government’s Digital India program.
“I will only say that I see great future of telecom sector in this country…with Digital India program where you have JAM — Jan Dhan Yojana (which provides financial inclusion), Aadhar (gives digital identity) and Mobile (provides means of communica tion as well as act as a proxy digital identity),” he said.