According to reports, paperless transactions during the past financial year amounted to INR 92 lakh crore as against paper-based transactions worth INR 85 lakh crore. For a country like India, struggling with issues such as financial inclusion, black money and lack of infrastructure (internet connectivity in rural areas), this news is a welcome surprise and demands to be celebrated. But it went largely unnoticed.
Growth in paperless transaction is in line with the government’s and the RBI’s agenda of creating a cashless society, with monetary transactions through the internet, ATM, cards and mobile devices.
Why is increase in paperless transactions cause for celebration?
Moving from paper-based to paperless transactions can have a transformative effect on the country:
- Black money can be curbed, as money in the system can be easily tracked and accounted for through the online payment methods
- Cost per transaction can be reduced
- Circulation of fake currency can be monitored and controlled.
- Comfort with online modes of payment can aid the growth of the e-commerce industry which, as of now, is trying its best to discourage the CoD payment option.
- Increase in preference of cashless payment systems can also aid RBI’s financial inclusion goal
Along with improving the economy, preference for paperless financial transactions can also give a boost to the electronics and IT industry by providing ample opportunities to introduce new devices for both the consumers and the merchants. Entrepreneurs can innovate and create new platforms for processing transactions e.g. with the increase in preference for online payments, usage of smart phones will further increase, and facilities like mobile wallets will become more popular.
On their part, the government and the RBI have, in the last few years, implemented measures like – Rupay cards, direct-benefit transfer schemes, 2-step verification process for online transactions, debit card MDR (merchant discount rate), and wallet service licenses, etc – to promote cashless transactions.
But the startup community has seen very little action on this front
Given these measures, one would have expected the online payments industry to see the most innovative products being launched. However, significant and meaningful efforts in this direction are yet to be seen. The entrepreneur community has not shown the expected enthusiasm or innovation to take advantage of the still evolving industry.