Almost a year down the line, is Prime Minister Narendra Modi’s dream of making India a cash-less or less-cash country becoming a reality?

Industry stakeholders feel that though the note-ban drive by the government gave the necessary impetus to citizens to start adopting online payment platforms, a lot needs to be done by both the government and the industry to make it a success.

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The adoption rate of online platforms was high during the demonetisation period, but it plateaued out as soon as cash became available in the system.

When the the Modi government banned high denomination notes of Rs 500 and Rs 1,000 notes on November 8 last year, removing an overwhelming amount of cash from the economy, people had to willy-nilly fall back on plastic or online transactions.

“The fact that 86 per cent of the cash available in the system was sucked out overnight gave an immediate boost to online/mobile payment platforms. There was a push-up factor,” Vishwas Patel, co-chair, Payments Council of India (PCI) and founder and CEO of CC Avenues, told IANS.

But once cash was back in circulation, those who earlier dealt mostly in cash went back to doing so, he said.

The PCI was formed under the aegis of Internet and Mobile Association of India in 2013 to cater to the needs of the digital payment industry.

He said during November, December 2016 and January 2017, online transactions were at their peak. In October 2016, debit card transactions stood at Rs 21,941 crore and those of credit cards at Rs 29,942 crore. Post-demonetisation, in December 2016, debit card transactions jumped to Rs 58,000 crore and those of credit card were at Rs 31,150 crore.

However, in August 2017, 10 months after the note ban, debit and credit card transaction stood at Rs 36,000 crore each, having come down substantially from the heights they achieved, but not falling back to the pre-demonetisation lows.

Patel said that after the cash flow in the system eased, small kirana shops stopped transacting through online payment channels, primarily because they did not want to take a tax number or a Goods and Services Tax number. “They do not have the wherewithal to pay taxes,” he said, adding that the “government needs to incentivise merchants, otherwise small and medium enterprises are going to go back to cash mode.”

Patel said security and trust in payment systems was something all stakeholders need to work on together. “As an industry body, we are preparing a National Negative Database of consumers and merchants so that we can reduce fraud and build trust in the eyes of consumers,” he added.

The database details would be circulated amongst payment gateway service providers, banks and card companies. “We are also working on a trust certificate that can be displayed by all merchants on their websites,” Patel added.