Govt to fund best ideas for taking digital payments beyond cities

With the idea of expanding digital payments beyond the realm of urban areas, the government has invited proposals from startups and fintech firms to build innovative solutions that will take these to the marginalised areas and sections of the country. The shortlisted ideas will be funded by the government.

Voice-based solutions facilitating digital payments using mobile phones, solutions for local language apps, and usage of feature phones for performing digital payments, are some of the areas for which tenable proposals have been called for. These are among areas in which the government has recognised that past efforts have not been successful.

“Though there has been unprecedented growth in digital payments, the potential is still huge. Cash still dominates Indian markets. There is a need to accelerate the adoption of digital payments across the country,” the Ministry of Electronics and IT said in its call for proposals.

Companies were given time till September 15 to submit detailed project ideas. These would then be evaluated and finalised. The government is looking for solutions also to increase the use of digital payments by women and the disabled; farmer organisations and in the handicrafts space; and bridging the gap in areas like Jammu & Kashmir, Ladakh, Tier-III cities and beyond.

There are several companies which are already enabling such solutions and operating in niche areas. The government, however, is looking at promoting these technologies at scale for the country. For instance, ET reported earlier this month that an Amazon and Mastercard-backed firm, ToneTag, is working to enable voice-based payments which will be launched in around 50,000 villages and small towns, wherein people will be able to use voice in their local dialect to complete a UPI transaction on their feature phones.

A report titled ‘Rural Covid Barometer’ by Kantar and Dialogue Factory noted that there is a significant rise in digital payments as an important mode of transaction in rural areas of the country. This offers a robust platform for rural financial inclusion, as also for suitable hyper local promotions, it said. The Reserve Bank of India’s Annual Report 2020-2021 also noted that the Covid-19 pandemic had propelled the country towards less-cash alternatives, an ecosystem that was already beginning to benefit from open innovation.

The call for proposals from MeitY noted that digital payments have seen a huge increase in the last few years. The total transaction volume has increased from Rs 2,071 crore in fiscal 2017-18 to 5,554 crore in FY21. The DIGIDHAN Mission aims to achieve a target of Rs 6,000 crore digital transactions in FY22.

It also noted that during the coronavirus crisis, digital payments have been keeping the economy running and helping people reduce contact with virus, but more needs to be done.

“Digital payment penetration and presence of digital players is substantial across different locations in India, but still lacking in terms of adoption by N-E states, Ladakh, J&K and rural areas due to challenges of Internet availability, connectivity, awareness and demographics,” it said, adding that the endeavour is to promote new areas of technology to induce progressive developments and competitive advantage across the board.