For a country not exactly known for its digital prowess, India is making pretty rapid strides in fintech with some interesting innovations. Topping the list, of course, is Aadhaar which was not just a unique database of biometrics the largest in the world but, because it allowed the database to be queried across space, this allowed for a variety of services from ration shop deliveries to e-signatures. Over time, as the suspicion over the use of Aadhaar grew and people feared their data could be stolen or misused, Aadhaar came up with other solutions such as Virtual ID that masked the number by allowing users to generate a random number online. Another success story is that of UPI, a mobile-based payments system created by the National Payments Corporation of India (NPCI) and which is linked directly to your bank account. UPI payments have increased rapidly, from a mere `3 crore in August 2016 to a whopping `106,737 crore in February 2019 and, in a sense, offer a possible alternative to debit and credit cards; UPI transactions today are roughly equal to all debit and credit card transactions at merchant outlets (Point of Sale, or PoS, in jargon) and around 28% of all card transactions including ATM withdrawals.
Apart from the fact that UPI prevents dangers like cloning since you don t have a card that is given to the merchant, this is an Indian system of payments and, to that extent, offers an alternative to a Master/Visa-based payments system. Over time, UPI has also developed more safeguards and, as in the case of Aadhaar, members can create virtual IDs to mask the bank their UPI ID is associated with, and even their phone number. Indeed, with the spread of UPI QR codes that are simply a printout, perhaps laminated, there is the possibility of spreading digital payments across the country without expensive PoS machines.
Equally impressive, in this context, is India s largest bank, State Bank of India, coming up with card-less ATMs that allow customers to withdraw money from SBI ATMs without using debit or credit cards; while the facility will initially be available across 16,500 ATMs, over the next six months, it will be available in all 60,000 SBI ATMs. Presumably, other banks will also start adopting this soon, in which case, it can potentially be available in all bank ATMs over time. In this case, the customer will use her SBI app to generate a random number which is then inputted on the ATM keypad to withdraw the money. As in the case of Virtual Aadhaar, UPI, and virtual cards such as those offered by several banks on their mobile phones, the SBI facility offers another layer of safety since there is a possibility of hackers stealing information when the card is inserted into the machine. With such innovations, one big fear of cloning has been taken away, though the fear of hacking into the bank account becomes more real. While there are various solutions an SMS alert is the most basic this has to be the area where the next lot of innovation will be focused upon.