Opinion | Push aside barricades to expand digital transactions

On 30 December, 2019, the Central Board of Direct Taxes (CBDT) issued a notification which ordered companies whose turnover exceeded ₹50 crore to include the Unified Payments Interface (UPI) and RuPay debit cards as payment methods. It was a welcome step to expand digital payments in India. Along with the Reserve Bank of India’s (RBI) decision to allow recurring payments through these instruments, this notification is expected to help expand India’s user base for digital transactions. More importantly, the CBDT’s notification was prescient because virtual payments have turned out to be lifesavers for consumers during the country’s 50-plus day covid-19 lockdown.

Amenities like pay-television, telecommunications, insurance, e-commerce and utilities form the bulk of cash and digital payments in India. The Boston Consulting Group estimates that only 20% of people in India pay their utility bills online, and the rest prefer to settle them through cash. The recent RBI circulars that allow recurring payments on cards, wallets and UPI are a sign that the central bank sees subscription payments as a vehicle to increase digital transactions.