In an attempt to encourage poor and illiterate people in rural areas to make digital payments, the government has recently indulged in promoting Aadhaar Pay which ensures financial transactions by just using fingerprint authentication.

This acting government has been working towards promoting digital payment systems and has reported a 400- 1,000% increase in digital transactions since the demonetization.

The “Digital India Initiative” has been set up to provide internet access and comprehensive mobile phone coverage across India, helping over a billion people to get online and utilize digital payment techniques. The RBI has been promoting a biometric authentication system for banking and the Aadhar Enabled Payment System (AEPS) can be used to open a Bank Account by using just an identification number and fingerprint.

The Government is also promoting mobile wallets. Recently, the RBI had issued certain guidelines that allow users to increase their total account balance to Rs 1, 00,000 subject to a verification procedure known as “Know your customer verification”. Various incentives have been offered by the government in order to promote Digital India or Cashless India as mentioned herein below:

  1. A waiver on Service Tax of 15% on transactions up to 2000 rupees .
  2. Digital purchases of fuel through credit cards, mobile wallets or e-wallets, have also been discounted by75%
  3. Free accident insurance worth 10 lakh rupeesfor passengers who have booked their tickets online.
  4. Upon the purchase of new LIC policies (life insurance policies) online via its site, an 8% discount is offered.
  5. The introduction of various technologies such as BHIM (Bharat Interface for Money) app for transactions between consumers and merchants.

In addition to government incentives or RBI, Companies are also participating in combating cyber-crimes. Microsoft has recently undertaken the operation of a full scale cyber security centre called the Cyber Security Engagement Centre (CSEC) in India. This centre monitors the spreading of software viruses, the origins of cyber-attacks and other suspicious activities, permitting the user a safer interface.

However, currently this movement towards a cashless economy is slowed down for the following reasons:

1.Transactions are mainly carried out using cash:

2. ATM use is mainly for cash withdrawals and not for settling online transactions

3. Limited availability of point of sale terminals. (card reading machines)

4.Mobile Internet penetration remains weak in rural India. In India, there are approx. 350 million internet users. The internet penetration rate is just 29.5% (worldwide internet penetration: 46.8%).