Currency Note Ban: Why the Unbanked Are Not Yet Ready for Digital Payment Platforms

Let’s face it. India is a predominantly cash-based economy. Before the Prime Minister’s Jan Dhan Yojana was launched, less than 15% of the population was connected to the mainstream economy through bank accounts. And because people have been tuned to transact in cash to avoid going through the hassles of a banking transaction, and with massive tax evasion at all stages of commercial transactions, putting a stop to the practice all of a sudden was always going to be a Herculean task for any government. Therefore, Prime Minister Modi has taken a very bold decision through the currency note ban of Rs 500 and Rs 1000 notes, the ramifications of which could never have been properly anticipated by anyone in the seat of power.

Digital wallets hog the limelight

The currency note ban has now suddenly shifted the spotlight on digital payment platforms such as credit/debit cards, mobile wallets, UPI, Net Banking, etc. Now human behaviour does not transform in a jiffy. Those who’re used to transacting in cash and have never even used a mouse to transfer money would either not understand the game or would be too concerned about security to enter it overnight. But as abrupt as the currency note ban or demonetisation was announced, people have really not been left with too much choice either.

A better approach could have been an aggressive push towards digital transactions before demonetisation with a standardisation of technologies and processes used. Right now it’s all too very confusing with a user having to first understand the different options available and then make a choice as per his need. Further, he needs to keep using these platforms regularly to ensure he does not miss out on a key security parameter while transacting. Different platforms have different interfaces and designs and moving around different menu items is not the easiest thing to do for someone not familiar with IT. Even today we see people seeking help of agents or middlemen to open and operate online accounts wherever direct transfer of subsidy amount takes place.

Financial institutions need to take the lead

The government and financial institutions should take the lead in laying standard operating procedures both in terms of user interface and also in ensuring security for digital transactions. If two-factor authentication is to be insisted upon then such institutions should ensure everyone, read the common man, understands very clearly how it works. Moreover, a common identity such as Aadhaar could be used as the user ID across different platforms to alleviate the need to create multiple identities across platforms. These are just  a few hints at what needs to be done but clearly for a sustainable digitial push in India, digital payment platforms need to be promoted aggressively amongst the unbanked population.