Government Backs Next Wave of Digital Payments

The next wave of digital payments is expected to be led by ‘person-to-government’ payments, marking a move away from cash transactions. This development is in line with the Digital India policy and is being facilitated by the National Informatics Centre (NIC), a government-backed body. NIC is developing applications capable of accepting digital payments, settling transactions, and generating invoices for various government departments.

Digitisation of Village Level Payments

The initial wave of digitisation saw traffic challans go digital. The government’s current focus is on digitising payments at the village level. This includes panchayat tax payments and municipal corporation payments.

Digitising Temple Donations

NIC is also moving towards the digitisation of temple donations. In collaboration with Worldline, a payment major, pilot tests are being conducted in Tamil Nadu. The traditional practice of dropping donations in hundi or making payments to the temple trust is being digitised via apps built into PoS terminals.

PoS Terminals for Digital Payments

PoS, or point-of-sales terminals, can process card and UPI payments. The new applications being developed accept payments against bills generated for citizen services, generate receipts, and reconcile transactions. The government aims to digitise all person-to-government payments through these PoS terminals.

Rise in PoS Transactions Post-Pandemic

A report by consultancy major PwC highlighted the rapid growth in PoS transactions following the pandemic. The report attributed this growth to the availability of PoS and QR payment options in all person-to-government and utility bill payment outlets.

Testing in Cash-Heavy Locations

Worldline India is running a pilot programme in some temples in Tamil Nadu, known for their heavy cash transactions. The government aims to digitise these cash-heavy locations to streamline and modernise transactions.

Smart PoS Terminals

PoS machines are evolving into smart Android terminals, capable of supporting multiple applications. This makes them capable of accepting all forms of payments, not just merchant transactions. Large PoS deployers like Pine Labs, Paytm, and Worldline are switching to these smart PoS terminals. These terminals can generate QR codes for UPI payments, generate receipts, and settle transactions against inventory, enhancing digital payment acceptance capabilities for government departments.