News Highlights:
The Reserve Bank of India (RBI) has launched a programme to adopt 75 villages and convert them into digital payment-enabled villages.
Digital villages programme
- Overview:
- The programme has been launched as a ‘Har Payment Digital’ mission amid the ‘Digital Payments Awareness Week (DPAW) 2023.’
- RBI decided to initiate the 75 Digital Villages programme through the adoption of 75 villages there will also be the involvement of village-level entrepreneurs.
- Under the initiative, payment system operators (PSOs) will adopt these villages across the country and conduct two camps in each of these villages to improve awareness and onboard merchants for digital payments.
Digital India programme:
- About:
- The Digital India programme is a flagship programme of the Government of India with a vision to transform India into a digitally empowered society and knowledge economy.
- “Faceless, Paperless, Cashless” is one of the professed roles of Digital India.
- As part of promoting cashless transactions and converting India into a less-cash society, various modes of digital payments are available.
- Modes of Digital Payments:
- Unified Payments Interface (UPI)
- Bharat Interface for Money (BHIM)
- UPI 123PAY
- UPI Lite
- Cards (including RuPay Debit Cards)
- Immediate Payment Services (IMPS)
- Aadhaar Enabled Payment System (AePS)
Significance of Digital Payments:
- User friendly:
- It will provide economical and user-friendly digital payment solutions.
- It will empower users with affordable payment options accessible anytime and anywhere conveniently.
- Load reduction:
- It will reduce the load on banking networks for small transactions.
- Efficient:
- It will allow payments over older feature phones.
- Digital society:
- It is a journey towards a less-cash and less-card society and will enable the further deepening of digital payments in the country.
- Global leader:
- This will reinforce India’s position as the global leader in the digital payments domain.
- Hike in mobile banking:
- With the change in customer behaviour towards embracing digital and touchless modes of payments, partly due to the CoVID, there is a spike of 50% in mobile banking users, indicating the inclusion of first-time users into the digital fold.
- Expanding RTGS:
- RBI will look into the feasibility of expanding RTGS to settle transactions in major trade currencies such as the dollar, pound, and euro too would be explored through bilateral or multilateral arrangements.
Challenges:
- Geopolitical risks:
- The document also talks about the ring-fencing of domestic payment systems, including the need to mandate domestic processing of payment transactions in view of the emerging geopolitical risks.
- Frauds:
- With the growing adoption of digital payment modes, there will be a rise in digital payment fraud.
- Domestic storage of payment data:
- Banks and non-bank PSOs are allowed to process payment transactions abroad, subject to certain conditions.
- Charges on digital payments:
- The Reserve Bank would also undertake a comprehensive review of all aspects related to charges involved in various channels of digital payments.
Pic Courtesy: Freepik
Content Source: The Indian Express