RBI Governor stresses on making money transfers easier through smartphone

India is the fastest growing smartphone market and mobile banking services are being encouraged to leverage the high mobile density. RBI today said it will become easier in coming weeks for people to transfer funds between bank accounts through their smartphones.

RBI Governor Raghuram Rajan also made a case for tax benefits to merchants for promoting digital transactions, "I am especially enthused by UPI, as smartphones become more widely available. Transfers from bank account to bank account will become easier in a few weeks via smartphone through the Unified Payment Interface," the Governor said.

Elaborating, Rajan said if a villager needing to pay a shopkeeper he/she only needs to know the latter's alias ­say Ram@xyzbank.psp to transfer funds. "Neither needs to visit the bank to take out or deposit money, no point of sale machine is needed. With the price of smartphones falling sharply, we are on the verge of solving the last­ mile problem," he said.

The Governor said that despite the huge potential, activation rates and usage levels of electronic payment services remain at low levels though growth is picking up. "No doubt, the fear of taxation, as payments move from cash to electronic, plays a part in dampening activity. As information technology brings down the possible space to avoid or evade tax, and as the benefits... I have no doubt that merchants will push more for electronic payments," he said.

Governor also touched on giving tax benefits, "Some tax benefits to those merchants who show increases in digital transactions, and perhaps innovative ways to encourage customer participation, may be beneficial."

Rajan also stressed on the importance of systems that offer security of transactions even to the unsophisticated user and do not place a huge burden of care on them. "There is no point creating security for the ideal customer, instead the system should incorporate the possibility of mistakes by the actual customer that we have," the Governor said.