The share of unsuccessful Aadhaar-enabled transactions involving two different banks is more than twice that of transactions where the issuing and the remitting bank is the same, according to the Economic Survey 2016-17.
Citing data sourced from the National Payments Corporation of India (NPCI), the Survey showed that between April 2015 and January 2017, the share of Aadhaar-enabled transactions that were declined moved between 50% and 65% for transactions involving different banks (off-US). The corresponding range for transactions that involve the same bank as issuer and remitter (on-US transactions) was roughly 20% to 30%.
This bodes ill for the growth of an interoperable digital payments system in the country, the Survey said. “One plausible hypothesis for this differential is that the larger banks are declining transactions involving smaller remitting banks while ensuring that transactions involving themselves are honoured,” says Chapter 3 of the Survey. “But such problems will need to be addressed, since payments banks, telecommunications companies, and small banks are in the vanguard of financial inclusion.”
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The Survey adds that banks should refrain from attempts to thwart interoperability, especially on channels such as the NPCI’s Unified Payments Interface (UPI), access to which will be critical in enabling the poor to make digital transactions.
NPCI data cited in the Survey also show the value of total transactions made through Aadhaar-enabled payment systems (AEPS) rising to more than Rs 5 crore from around Rs 3.5 crore between October and December 2016.
The value of approved, or successful, transactions through AEPS rose to around Rs 3.5 crore from Rs 2.5 crore during the same period.
In the wake of the demonetisation, the government had taken a number of steps to incentivise digital payments, such as the launch of the BHIM app for smartphones, the BHIM USSD 2.0 for feature phones and Aadhaar Merchant Pay for those without phones, apart from reduction of fees on digital transactions.
“Aadhar Merchant Pay will soon be integrated into BHIM and the necessary PoS (point-of-sale) devices will soon be rolled out,” the Survey said.