The challenge of small payments

The huge population of India and the tradition of making small payments in cash only has created a problem. It is difficult to get 5 Rupee coins leave alone smaller ones. It is very common for shop keepers and auto rickshaw drivers to tell you they do not have change. I suspect that the Reserve Bank of India (RBI) finds it costly to mint coins and to print small denomination notes.

Innovation is called for. Imagine you can “beam up” amounts such as Rupees 57.50! All you should be doing is to enter 57.50 into an app, point your cell phone at a device in the shop and click a button. The amount should be transferred and a receipt in the name of the merchant, giving a transaction reference number, should be saved in your app. The app implementer can choose the mode of signaling, using the LED flash on the cell phone, or using Bluetooth or WiFi. Ideally the app should automatically turn on Bluetooth or WiFi even if the customer has not switched them on. The app can switch them off after the payment.

What about the transaction cost at the Bank’s end? Don’t worry, the banks know various ways of passing this cost on to the merchant! In any case, this cannot be very high; further any such cost will be more than compensated by faster handling of small payments at the merchant end.  

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