Plastic money will be redundant in India by 2020: Amitabh Kant

He predicts an Aadhaar-based system that will allow authentication of payments with fingerprint

India could see credit and debit cards becoming redundant as by 2020. As more people adopt the government’s Aadhaar Payment Bridge System (APBS) which will allow authentication of payments with nothing more than a user’s fingerprint.

In the aftermath of demonetisation, the government has begun pushing digital payments as a way to counter the shortage of cash as well as a way to ensure an accountability in payments. While a big part of its strategy has been to promote digital payments through smartphones, initiatives such as APBS, which will completely remove the need for technology at the user’s end.

“India is in the midst of huge disruption in the world of both financial technology and social innovation. By 2020, my view is that India will make all debit cards, credit cards, ATMs and POS machines totally irrelevant,” said Amitabh Kant, CEO of NITI Aayog, in a panel discussion at the Pravasi Bharatiya Divas in Bengaluru on Saturday.

The country has around 662 million debit cards and less than 25 million credit cards in usage currently. In contrast, it has over a billion mobile subscriber base of which around 300 million use smartphones with internet access.

But kiosks using APBS could be an alternate transaction method as each individual as a unique Aadhaar ID linked to their bank accounts and emerge as an alternate platform.

“When people ask what will happen to the poor? People living in rural areas and their ability to utilise technology is much quicker and much faster than literate people living in urban cities,“  says Kant.

Sharad Sharma, convenor of iSPIRT, an independent think tank, which has anchored the IndiaStack, a set of underlying technologies for improving digital access to the next billion people, says transactions on Unified Payments Interface  (UPI)  will over take over debit card transactions by March

“By March, the number of online transactions - which are driven by UPI will over take debit card transactions, which had been around for 25 years,” Sharma said. “By October this year we will have more than 100 million transacting digitally. We will become the largest payment system within this year.”

On December 30, Prime Minister Narendra Modi has launched the UPI-based Bhim app to allow users with a bank account send or receive funds to others digitally