Letters: Digital transaction

With reference to “Coercion doesn’t pay” (February 13), we should not read too much into the Reserve Bank of India data showing a dip in digital transactions in January 2017 vis-à-vis December 2016. Let us not forget that the boost in such transactions in November-December was due to the sudden rise in the inconvenience cost of such transactions given the circumstances in the wake of demonetisation. With remonetisation nearing completion, the playing field is again becoming level for all instruments of payment.

Now, for the digital transactions to maintain a higher growth, the incentive structure will have to play a crucial role in the short term before a structural break is observed in customers’ long-term behaviour. At the same time, the government as well as the other key players in the payment arena will have to continue their pursuit of easing the supply side bottlenecks. The latest Budget has announced a few measures in this direction. The infrastructure for digital payments entails cost on the part of merchants and until and unless there is appreciable benefit derived from such investments, the motivation to shift to digital transaction might not be strong enough. I have come across merchants complaining that the point of sale terminal charges of some banks are very high and in respect of some others, where charges are reasonable, the waiting queue is very long. Going forward, the supply side issues are expected to straighten out. Notwithstanding these teething troubles, the show must go on and there is no case for all of us to be distracted by the short-term movement in transaction statistics.

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