Government of India Digital Transactions Target – 2,500 crores / 25 Billion

          Government of India under the leadership of Shri Narendra Modi has set a target of 2,500 crore digital transactions in the financial year 2017-2018.

          The number of 2,500 crore digital transactions or 25 billion digital transactions has been announced by Shri Arun Jaitely, Union Minister for Finance, Government of India, in Parliament on February 1, 2017 during the presentation of the Union Budget for 2017-18.

An announcement has been made to set up a Mission to reach 25 billion digital transactions for 2017-18 through Unified Payment Interface (UPI), Unstructured Supplementary Service Data (USSD), Aadhar Pay, Immediate Payment Service (IMPS) and debit cards.

Please note transactions through Cheques will not qualify under the 25 billion numbers.

The action from the Central Government side has picked up for ensuring that the target of 25 billion digital transactions is met by 31^st March, 2018.

The government has split the number across 35 government ministries and 29 states and seven Union Territories.

In the next couple of months a real-time tracking portal will be rolled out. The primary objective of the portal is to remind the various stake-holders the road ahead.

The ministry of road transport and highways and the department of telecommunications (DoT) will be chasing the highest targets for electronic payments in the government's plan to turn India into a less-cash economy.

Ministries have been chosen depending on their ability to carry out digital transactions through their physical footprint. “For the petroleum ministry, the point of interface will be the petrol pump network; for human resource development it is the educational institutes, and for railways, it will be the stations or the booking counters," said the official.

Image courtesy - Economic Times

While the ministry of road transport and highways and the department of telecommunications have been given targets upwards of 5 billion, they are followed by the ministries of railways and petroleum and natural gas, which must aim for 2.82 billion and 2.29 billion transactions, respectively.

Now the targets have been distributed, the respective ministries and states will unveil detailed road-maps.

Among states, Maharashtra and Uttar Pradesh have the highest targets (above 3 billion) followed by Tamil Nadu, West Bengal and Gujarat with numbers in the 1.5-2 billion range.

Digital Transactions in India-Zip Zap Zoom

          This Press Release by Government of India has started to create waves in the financial industry across the world.

          The full rollout plan will be unveiled in the next couple of weeks. As of now this is only a ‘trailer’.

          In simple terms, the focus is on to reduce ‘cash transactions’, in India and promote Safe Payments through cards and digital means.

          A series of steps both short term and medium terms are in the pipeline. Short term steps will be implemented within one year. Medium term steps will be implemented within two years.

          These will be chiefly implemented by Government Ministries/ Departments/ Organisations. Private sector too will join in once the benefits are visible.

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for introduction of steps for promotion of payments through cards and digital means.

          Promotion of payments through cards and digital means will be instrumental in :-

• reducing tax avoidance,
• migration of Government payments and collections to cashless mode,
• discourage transactions in cash by providing access to financial payment services to the citizens to conduct transactions through card/ digital means and
• shifting payment ecosystem from cash dominated to non-cash/less cash payments.

The essential features of the proposals for promotion of payments through cards and digital means include

• steps for withdrawal of surcharge/service charge/ convenience fee on card/ digital payments currently imposed by various Government Departments/organisations 
• introduction of appropriate acceptance infrastructure in Government Departments/ organisations;
• rationalization of Merchant Discount Rate (MDR) on card transactions
• a differentiated MDR framework for some key transaction segments;
• mandating payments beyond a prescribed threshold only in card/ digital mode;
• introduction of formulae linked acceptance infrastructure by the stakeholders of certain card products;
• rationalisation of telecom service charges for digital financial transactions;
• promotion of mobile banking;
• creation of necessary assurance mechanisms for quick resolution of fraudulent transactions
• review the payments ecosystem in the country.

Now it is up to the various participants in the Digital Transactions arena to roll-out innovative, simple, safe, LessCost, low size, solutions to fast track the growth of digital transactions. 

          These guidelines will be beneficial to the upcoming Payment Banks and Small Finance Banks to roll out appropriate products from Day 1.