Making Small Payments Work

Cashless payments are getting a lot of attention nowadays, but have you seen an auto not affiliated to Ola which accepts a cashless payment? I haven’t seen one! I believe that the notion of cashless payments is a bit forbidding for a significant fraction of the people, including many auto drivers. When I talk about auto drivers, it includes people manning small shops as well. I had filed a related post earlier. Visit

http://newstudentresearch.blogspot.in/2016/07/the-challenge-of-small-payments.html

A society that does not facilitate cashless transactions is a senseless society. The issue is not merely one of black money; it is also about avoiding waste of people’s time.

Why do so many of our people insist on continuing to use cash? I believe that that technical people involved should study the difficulties new users of technology face and work to eliminate these difficulties. Using technology should make transactions easier, not harder! The app on a mobile phone should require very little from the customer making a payment or the driver receiving it. You should be able to touch the app’s icon, point the phone’s camera at the auto’s meter or a similar display in a shop and touch the icon a second time. That should transfer money from your bank account to the recipient’s bank account or digital wallet. Who has a wallet, who uses a bank account, what is the name of the bank, etc., should be irrelevant at the moment the transaction occurs. Neither the customer nor the recipient of the payment should have to enter any numbers or addresses into a phone.

Character recognition is robust enough to let the app read off the amount to be paid as displayed; the app should similarly read the recipient’s Unified Payments Interface address from a sticker on the meter. (For information on UPI, visit Unified Payments Interface). 

While the front end described above has to be implemented, UPI already provides you the infrastructure to support it. I believe that student projects can easily achieve the goal of demonstrating such a user-friendly front-end for cashless transactions, integrated into the UPI network. A word for those who wish to carry out this project: print information to be read by the app using an Optical Character Recognition (OCR) font. This may not be necessary if you use a standardized font carefully chosen for the purpose, but it may simplify your task.  

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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