By A P Hota, CEO & MD, NPCI
Headquartered in Mumbai, NPCI serves as the core organization for all retail payment systems in India with the support and guidance from the RBI and IBA.
For building a ‘Less Cash’ economy, awareness of the customer is as much important as infrastructure readiness. While infrastructure development has moved substantially during the past few years, efforts on building awareness on the part of the consumer has not been adequate. Data indicates that number of banks with internet banking, mobile banking and card payment facility has almost doubled during past five years. Such a doubling of infrastructure should lead to increase in volume of transactions by multiple times. But the same has not happened. This is primarily due to lack of awareness on the part of the customers and also inadequate efforts on the part of the banks to allay the fears of the customers transacting electronically.
In the area of mobile payment system, Immediate Payment Service (IMPS) has been launched in the country which is a next generation money transfer system operating 24x7 on a real time basis. To cater to the needs of the segment which does not have smartphones, a USSD based IMPS has been created under the common service code *99#. Considering that, the country has 900 million plus mobile phones and 700 million plus active bank accounts. Ideally, all bank customers can have access to mobile banking if they link their mobile number to their bank account. This optimism is strengthened by the fact that almost all the banks including small cooperative banks are under Core Banking Solution (CBS) which is a necessary condition for 24x7 mobile banking services. USSD based mobile banking service is also available in local language. Thus, there is no challenge in banking infrastructure. But the data available indicates that only about 200 Million customers have linked their mobile number with their banks. Possibly, the customers are unable to see the benefits of linking the mobile number. The regulatory mandate, that every credit or debit transaction to the bank account need to be alerted to the customer on the mobile, is possibly not known by the customers. There is a need for providing hand-holding to the customers in the use of mobile phones for banking services starting with very simple service like Balance Enquiry through a missed call or making a call to the call centre to get information on some financial product.
In the area of card payment system, though 1.4 million Point of Sale (PoS) terminals is not adequate for a large country like India, the number should be good enough at least from carded customers in the metro cities to transact with debit/credit cards. But the volume of PoS transactions in the country is only 4 million a day which works out just 4 transactions per terminal per day. One of the reasons cited for such volume of PoS transactions may be that many customers are still not aware of the benefits of PoS transaction compared to transacting by cash. There is misplaced fear in the mind of the senior citizen customers that the card and the PIN may get compromised. Newspaper report every now and then regarding card frauds without any explanatory notes leave the customers with more questions than answers on using the cards at locations outside the banks’ premises. Therefore, use of card on ATMs provides more comfort than using the same on a PoS machine. The fact that card payment system can also be safe and secure with some precautions taken by the customer needs to be explained with details.
For remittance and bill payments, India has developed excellent infrastructure of NEFT and IMPS system. Bank customers having access to internet channel can easily do the remittance online. Remittance can also be done through mobile and ATM channel. But it is observed that during the first week of the month, a large number of people queue up in front of the branches for sending remittances. Queues before the Post Offices and Business Correspondent agents are also long. This could partly be a function of the awareness level on the part of the customers about the permissible and available channels for remittance delivery.
It would however, be appropriate to mention that banks have set up more than 1,000 financial literacy centres during the past few years and the number is growing. The financial literacy centres act as the focal point for organizing literacy camps and counselling of customers in their respective jurisdiction. Education materials in local language are prepared and made available to customers. Joint publicity campaigns are being organized through Indian Banks’ Association (IBA). The Reserve Bank of India (RBI) and NABARD has also started educating the customers on the facilities available and precautions they need to take. But for a large country like India, steps required are much larger. Efforts required are both in supply and demand sides of Financial Inclusion.