October 19 2021: Did the pandemic usher in a retail digital payments revolution? Not really – suggests the latest report from independent think tank, Vidhi Centre for Legal Policy.
The pandemic forced an inevitable shift to digital payments in India, and one saw vegetable sellers with Paytm boards outside. However, consumer surveys by RBI and the National Payments Corporation of India indicate that Indians continue to have a strong bias for cash payments. The full potential of retail digital payments remains to be tapped.
The authors -- Shehnaz Ahmed , Senior Resident Fellow and Lead (Fintech and Aryan Babele, Research Fellow (Fintech), both nat the Vidhi – write that one of the biggest enablers for the adoption and sustained usage of digital payments is a conducive legal framework, which is the missing link
The report: “Modernising the Law for Payment Services in India: preparing for the Future of Retail Payments” examines India's primary law for digital payments that was enacted more than a decade ago when the digital payments market was at a nascent stage. It, thus, fails to account for policy goals such as competition, innovation, and consumer protection that are the hallmarks of a modern payments law.
The report recommends a renewed retail payment services law (Proposed Law) for India built on the principles of proportionate regulation. It promotes three primary policy objectives that underpin most modern payments law – (1) ensuring safety and soundness of payment systems, (2) promoting efficiency in the functioning of payment systems; and (3) the protection of consumer interests.
Key Features of the Proposed Law include:
The summary and full report can be accessed here: