PM Modi brings in tech guru Nandan Nilekani to pave way for digital payments
New Delhi, Dec 8: Following a chaotic atmosphere gripped within the nation after the announcement of demonetisation of higher denomination notes, Prime Minister Narendra Modi has stepped up with an unpredicted decision of roping in a high profile opposition member Nandan Nilekani for help.
Nilekani, a member from Indian National Congress has joined a committee to prepare a strategy for digital payments. His entry is part of the Centre’s attempt to end country’s reliance on liquid currency, especially in the rural parts.
Nandan Nilekani, former head of Infosys Ltd, is the brain behind the country’s biometrics based Aadhaar Unique Identity Program and mapping a plan for digital payment gateway will be his second national project.
Designed to eliminate corruption, Modi outlawed existing 500 rupee ($7.40) and 1,000 rupee notes on Nov. 8, which wiped out more than four-fifths of the nation’s currency and caused pain for millions, from street hawkers in the south to diamond cutters in the west. The government is trying a Plan B to salvage a situation that Credit Suisse Group AG and Deutsche Bank AG estimate will slow expansion by about 1 percentage point in the year through March.
Nilekani along with a 13-member committee are planning out working models to get more Indians to rely on the e-payments via their smartphones and point-of-sales machines in local villages.
The team is likely to prepare a multipronged approach to shift the people’s dependence on cash. The Centre has already launched its United Payment Interface (UPI).
“India lacks digital financial architecture and we need to fix the same first to get this going. How quickly the government can reach everyone is a question of execution and speed,” said Nilekani after the first meeting.
As presses run all day to crank out new 500 and 2,000 rupee notes, the committee featuring chief ministers of prominent Indian states as well as the India head of Boston Consulting Group met for the first time last week.
The key focus of the team is to get more merchants to accept UPI and procure more POS devices. This will eventually beat the bigshots like Paytm, Mobikwik and Freecharge who are pushing their e-wallets during the post demonetisation period.
The interface, rolled out by major banks in April, makes transferring money as easy as sending a text message. With the system already in place, Nilekani says boosting acceptance of the payments interface is achievable in weeks. Getting the estimated one million new POS devices, which would almost double the number in use as of August, would take longer because of the need for a tender.
The digital payments have been made easier as the central bank took off the two-step authentication process for transactions less than Rs 2000.
The committee is expected to meet again this week to look at how to approach those with limited access to technology. While India has 250 million smartphone users, there are about 350 million who only have feature phones while another 350 million don’t have a phone at all, Nilekani said.
For feature phone users, the committee recommends India’s existing retail e-payments app be adapted to technology that could be rolled out within weeks. That will be helped by lower charges, with the telecommunications regulator slashing the charges for transactions from 1.50 rupees to 0.50 rupees.
“Each category has to have a different strategy” said Nilekani.