Plethora of e-cash options

01st March 2017
Plethora of e-cash options

 In its haste to  push people into going cashless, government rolls out  one tool after another. As a result none of them has  a sustainable ecosystem -- and banks are being caught off-guard. 
IndiaTechOnline special
This article has appeared  yesterday in THE WEEK
Bangalore, March 1 2017: There is such a thing as a surfeit of goodies -- and as doctors will tell you, that doesn't make for healthy living.  This is a scenario being played out in the  e-payments arena.  Ever since demonetization was thrust on an unprepared nation  3 month ago -- leading to widespread  trauma for ordinary Indians -- government would have us believe that nirvana lies in embracing  e-cash. 
On DeMon-Day, last September, it had no mature alternative schemes of its own on the ground. People embraced one of the closed or semi closed e- walletschemes like PayTM, MobiQwik, Free Charge, Ola money etc to  get over the currency crunch.
Payment schemes  using the official Universal Payments Interface (UPI) suffered in comparison because  not enough banks were backing it.  The banks which did have a  UPI wallet  ( ICICI Pockets, HDFC PayZapp)  did not  talk to each other  or  were not interoperable. 
Late in December, government launched  BHIM with much fanfare (Bharat Interface for Money). It was developed by the National Payments Corporation of India on UPI  and needed just a mobile phone and a  linked bank account to operate.  People embraced BHIM, downloading 17 million copies of the app.    But till end February only some 15 of  over  100 banks had linked to BHIM.  Not the biggies like SBI and HDFC.
Then, there is the Aadhaar Enabled Payment System (AEPS) , where you don't even need a mobile phone -- only your Aadhaar-linked bank account.  Problem:  To authenticate,  it needed  a finger print or iris scanner.  The latter cost Rs 13,000. The former was not fool proof.  In rural areas and industrial towns, workers' fingers  had roughened and their finger scans often gave error results.  Authors of Aadhaar like Nandan Nilekani speak glibly of "no issues that are disproportionate  to the size of the project".  This is like saying you can't make an omelete without breaking some eggs. True, but sad! Aadhaar authentication is claimed to be  92% - 95% accurate. But these statistics miss the human cost. Just 1% error in Aadhaar verification  disenfranchises   11 million persons.... people who will miss a  quota of ration or a MGNREGA wage.
Most recently government has  encouraged  yet another  payment technology, Bharat QR Code  where  payment  is made to a merchant by scanning a QR code that is generated for the item sold.  NPCI, Visa, Mastercard, AmEx, RuPay are  partnering this. But ask yourself -- when did you last buy some item which has a QR code. Bar code yes, we are used to them in super markets, but QR code? Again banks have proved to be the laggards -- only some 14-15  are Bharat QR-ready.
But who can blame them?  Government rolls out one payment scheme after the other -- none of them  has time to mature, or has the  numbers of  merchants and financial institutions  to create a well populated ecosystem.  Banks are hard pressed   opening their gates to one tool and the next is already knocking on their doors.  
And in the breathless pace at which Aadhaar is being  expanded,   small matters of legality are brushed aside.

Vijay: Aaj mere paas paisa hai, bangla hai, gaadi hai, naukar hai, bank balance hai, aur tumhare paas kya hai?
Ravi: Mere paas Aadhaar  hai!
If they were to remake that 1975 classic, 'Deewar', today, the guy playing the Shashi Kapoor role would  flaunt his Aadhaar card rather than his mom, in reply to Amitabh Bachchan's taunt. 

The Supreme Court in a September 2016 ruling did not dilute its earlier opinion that the unique identification number, Aadhaar  cannot be made  mandatory. But  state and central government press on,  regardless, making it obligatory for an ever increasing list of  services.  'Governance Now' magazine listed  19 services  from  train concessions for senior citizens, to college admissions,  where Aadhaar is required. Government knows how to go for the jugular: Aadhaar is mandated in cases where  beneficiaries  can't afford to argue:  rations,  MGNREGA benefits, LPG subsidies. So they sign up -- or  starve.
Serious concerns have been by civil society about the security of Aadhaar data -- yet government has authorized nearly 600 agencies -- banks,  government departments,  telecom providers -- to perform Aadhaar based authentication.
Indian, jugaad has ensured that some of these agencies   resold  the data bases and clever people were  marketing them in innovative ways -- for profit.   Many of these enterprises have been blocked. Government even filed a complaint against Axis Bank for misusing such data  -- albeit  at the hands of a service provider.
Meanwhile,  to even suggest that conventional  payment avenues like ATMs and credit/debit  cards may soon be obsolete   and by implication could be scaled down-- as NITI Aayog  CEO Amitabh Kant did some weeks ago ---   is wishful thinking.
None of the half dozen  government-blesses e-payment schemes today are robust or sufficiently  ubiquitous  to fill the breach. Instead of announcing a new scheme every week, it would be better to home on to one compelling app, bend on banks to support it to the hilt, reduce the transaction cost to merchants to almost zero  -- and then  and only then, sing all those   hosannas  to a   cashless, digital India. 
Anything else,  is so much hype and hot water.