According to R Gandhi, recently retired as the Reserve Bank of India’s Deputy Governor said, "Right now we are trying to do all things including Aadhaar Pay, UPI, BHIM and simultaneously trying to work on MDR (merchant discount rates) on card payments."
Post demonetisation the Indian payment industry has gone through a dramatic change as innovative modes of digital payment methods have witnessed steady adoption among the masses.
According to R Gandhi, recently retired as the Reserve Bank of India’s Deputy Governor, "Right now we are trying to do all things including Aadhaar Pay, UPI, BHIM and simultaneously trying to work on MDR (merchant discount rates) on card payments."
"We are creating great expectations and that is my big worry. Second worry is we would not be able to assure security to the fullest," said Gandhi in a candid interview with Moneycontrol.
In its bid to move towards a cashless society and curb black money, the central government has launched a bouquet of digital payment options in the form of mobile apps and services such as Unified Payments Interface (UPI), Bharat Interface for Money (BHIM), BharatQR, National Unified USSD Platform and unstructured supplementary service data (USSD) codes for feature phones.
These services were introduced alongside existing online banking services like internet banking, mobile banking, national electronic funds transfer (NEFT) and immediate payment service (IMPS).
The UPI has shown vulnerability with a small security breach at a few banks.
According to AP Hota, MD and CEO of National Payments Corporation of India (NPCI) — the country’s umbrella organisation for all retail payments and the designer of the UPI app -- fraudulent transactions on UPI amounted to Rs 25 crore since December 2016.
Gandhi thinks that the sequencing of the system should have been decided differently. "Today all of it was done parallelly (sic), my approach would be to not do all things at one go but one by one."
Gandhi says every technology-related product or service needs testing and re-testing which requires time and it should not be done in a rush.
"If authorities give a target to do it by this time then they (banks, NPCI will have to deliver and they will cut corners and things can get challenging. Assuring security is important…" Gandhi added.
At RBI, apart from handling the monetary policy and the demonetisation exercise after Urjit Patel took charge as the Governor, Gandhi (60) was also responsible for currency management, financial market operations, department of information technology and Payment and Settlement Systems.
Security and grievance redressal key to digital success
Having said that Gandhi believes that digital is the way to go and every system will have some aberrations but there is a six sigma theory to it and hence the RBI wanted to focus on the financial side and formed the Cyber cell department.
"Everything today is digitally managed including financial transactions, airlines, traffic system, electricity, etc. Hence governments across the world are worried that future wars or enemy attacks will be through the cyber space and sitting anywhere in the world, your enemy can attack you by injecting a virus in your traffic or power system and need not require a plane," he said.
With the remonetisation exercise leading to a decline in digital transactions, Gandhi pointed out that habit formation to use digital payments will take time and India must focus on speedy grievance redressal to hook people on to the digital channels.
"I won’t be disturbed if there are failures…One is to limit the failures and tighten security. The second most important thing is that the resolution of the failure must be faster," Gandhi said."People will get an assurance even if things go bad, it has been corrected (quickly). There we are lacking. In our country, our attention to speed in resolving grievances things is taking time," he added.