Digital Payment in India

Ratan Watal Committee -2016

  • Committee on Digital Payments headed by Ratan P. Watal has submitted its final report to the Union Finance Ministry
  • It recommended different steps for promoting digital payments


C.Babu Naidu Chief Ministers’ Committee to PM 2016-17

  • It also constituted for promotion of digital payments
  • Its submitted its report in Jan 2017


Cash Payment


  • instantaneous settlement,
  • relative anonymity,
  • notion of security associated with holding physical value



  • cost of printing new currency (Rs.27 bn in 2015)
  • ATM networks cost, Security
  • Accidental loss or theft
  • ‘Wage loss, travel cost to collect cash from Bank, ATM
  • Fake Indian Currency Note (FlCN), Terror and naxal finance, Black money, leakage (74% consumer payments in cash)
  • Printing receipts paper, ink environment.



Digital Payment – Pro

  • Govt. payment alone can save 1 lac Cr.
  • Transaction tracking
  • Stop ponzi scams
  • Less moneylenders




  • ATM per million – 165 (one of the lowest in the world)
  • PoS terminal per million – 2548 (one of the lowest in the world)
  • Service tax on service charge- 15%, Merchant discount rate- 2%
  • KYC norms and documents



Merchant discount rate (MDR)

  • Merchant discount rate is the rate charged to a merchant for payment processing services on debit and credit card transactions.
  • The merchant must setup this service and agree to the rate prior to accepting debit and credit cards as payment.



  • Problem in interoperability in three way
  • Electronic money interoperability – wallet to wallet transfer
  • Payment network interoperability – wallet money to settle credit card payment
  • Finance institution interoperability – wallet to Bank emi or insurance
  • Now RBI gave permission for interoperability in wallet to wallet transaction



  • Low financial literacy
  • Hidden charges and misinformation
  • Lack of Data privacy law
  • Lack of Monitoring on electronic money


Govt. not role model


  • Govt need to take digital payment on their service
  • Govt. don’t pay to supplier by digital payment
  • Govt. can save 1 lac Cr. By doing digital payment



  • Vittiya Saksharta Abhiyan (Visaka) – Ministry of HRD


Behavior Change

  • Give promotional incentives to change behavior
  • Restriction –
    • Company depreciation/deduction by digital payment
    • Cash payment maximum limitation





  • Board for Regulation and Supervision of Payment and Settlement Systems
  • Its a sub-committee of the Central Board of the Reserve Bank of India
  • It is the highest policy making body on payment systems in the country.


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