1,000 crores market – Innovations in Traffic Violation Fines collections in India

          A 1,000 + crores market is waiting to be tapped by innovative service providers.  The size of this market is bound to increase in the coming months.

          Digital collection tools for Traffic Violation Fines are being introduced by many Sates across India.

          The traditional collection mechanism is through physical cash at the time on issuance of traffic fine challan.

          As the physical cash collection process was cumbersome with lots of paperwork, extra manpower and audit issues, Traffic Police teams started to look around for alternate collection mechanisms.

          In the erstwhile Andhra Pradesh, citizens could pay the traffic fine challan through the MeeSeva counters.

          Another new initiative is equipping Traffic Police teams with POS terminals for instant payment through debit or credit card.  This feature eliminates cash handling process. However, the main drawback is the convenience fees in addition to the traffic fine. This encourages cash transactions over digital transactions. Connectivity issues also lead to lower conversions.

          Traffic violation fines are under the jurisdiction of the respective States. However, all the states broadly follow the same rules.

          A couple of States have set their sights on NEFT.  The major advantages of NEFT for collection of traffic fines are:

a)     Offline transaction.

b)    150+ banks on NEFT platform.

c)     Easy to use.

d)    Transaction executed directly by the respective citizen.

e)    The traffic fine can be remitted by the person fined or any other person on his/her behalf.

f)     NIL Transaction charges (Majority banks in India offer free NEFT facility to their customers or with minimal service charges)

g)    Automated recon possible

h)    Differential pricing schemes possible i.e incentives for early payment, additional fines for delayed payments.

i)      Single Step or Dual Step options available.

j)     No need to expose the credit/debit cards details

Tips to encourage traffic fines collections through NEFT:-

1)     Graded traffic fines, 1^st penalty INR xxx, 2^nd repeat INRxxx+50, 3^rd repeat INRxxx+100

2)    Incentives for early payment i.e INR 10 discount if paid within 24 hours, INR5 discount if paid within 72 hours. The incentive credited back through NEFT or donated to NGOs

3)    Sending banks not to charge service charges for remittances to selected IFSCs.

4)    Reward points for early payment of the traffic fine. These reward points to be transferable.

Tips to ensure 100% matching of transactions through NEFT:-

Technology requirement:

a)     2 or more Service Providers offering this service- end-to-end

b)    Setting up Messaging standards.

c)     Standardisation of Traffic Challans.

d)    Each generated challan to have a unique number. This unique number will be

e)    Standardisation of IT programs being used by the respective State Traffic police

f)     Beneficiary registration for this set of IFS Codes not to be mandatory in online banking portals.

g)    Transaction upper cap to prevent wrong transactions.

h)    Reversal within 12 hours, if NEFT transactions with invalid/incomplete details are executed.  

Third Party service provider:- Service Providers can be selected via the Tender method or Swiss challenge method.

Billing method:

1)     Per transaction

2)    Float model – Service Provider remits the collections after keeping the monies in the bank accounts, for 2 days, 3 days or more depending on individual agreements with the respective state governments.

Expectations from Service Providers:-

a)     Integrated call centre

b)    End to End recon

c)     Complaint management

d)    24*7 uptime

Benefits:-

1)     Expand the scope of NEFT

2)    Enhance Safe Banking opportunities

3)    Reduced transaction cost

4)    Encourage transactions through banking channels

5)    Eliminate the need to carry bulky POS terminals

6)    Enhance overall fine collection                

Additional Reading material:

          Penalties under Motor Vehicle Act

          The Bengaluru police have a new problem on their hands. 

          Kerala Police tie up with BillDesk for online traffic violation fine payment

          Mumbai police allows payment of Traffic violation through NEFT

          Rs one lakh per hour: That's what police net as traffic fine in Bengaluru

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