The card transaction in the country have fallen to nine months low, raising a new challenge for the Centre's demonetisation move.
The card transaction in the country have fallen to nine months low, raising a new challenge for the Centre’s demonetisation move. As per a research by SBI, the aggregate of debit and card transactions at point of source (PoS) terminals has fallen to a little more than Rs 35,000 crore last month, which was the lowest since February.
The amount spent at PoS terminals was a little more than Rs 51,000 crore in October. Since the decline happened even as several banks have reported raise in the number of transactions with swipe cards after the the demonetisation drive throws up issues which the Centre must look into. It shows a dip in consumer sentiment. People are even using their debit and credit cards for purchases of relatively inexpensive items, while sharp fall in big ticket purchases have also been seen. This does not show well for the economy, ‘The Indian Express’ editorial has changed.
The Centre may well claim that this shows a short-term economic slump. After all, Prime Minister Narendra Modi spoke of 50-day time period to get the economy back on track. However, fact that transactions in the first half of December remained slow, at around Rs 18,000 crore, should be a reason to worry about. The report also shows the need for bolstering digital transaction infrastructure. In India, there are around 15 lakh PoS machines . The report also shows that the country needs 20 lakh such machines more. Most of these of these should be in tier II and tier III cities, and in rural places. A PoS machine costs between Rs 4,000 and Rs 8,000. There are low cost options but these need use of smartphones in the country. As only about 250 million people have such phones in the country, it’s difficult to imagine that the seemingly low cost options will be adopted without sound incentives. Centre took more than one onth to declare incentives for cashless transactions. But these incentives did not address the problems at the level of digital infrastructure.
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People want to make their purchases in cash only because they are not confident about data safety in digital transactions. In fact, a security breach before the demonetisation step had forced the SBI to recall more than three lakh debit cards. The Centre should also bring in a strong privacy law to rest people’s fears. This should be supported by robust awareness drives, hardly seen till now. Officials in banks have to play vital role in this endeavour. But they have their hands full after the demonetisation drive. The report is a warning of the need to push in the economy . Robust privacy laws and Sound digital infrastructure could be the first steps for this direction.