ONE Nation ONE Wallet
The Government of India under the leadership of Honorable PM Modi has been on a digitisation mission of all public services. The architecture that is being built is simple to understand, use technology to the maximum extent possible, create one base digital identity for the citizens on Aadhar platform as its nucleus and build all services around this. In a series of digitisation efforts, the government has announced One Nation One Ration card. Now on the occasion of India’s 74th Independence day, PM announced One Nation One Health ID. This is an ambitious move to link every citizen's health record to one health ID which is accessible anywhere based on a consent architecture.
Now, the time has come for the government to think of One Nation One Wallet. The Government wants to eliminate cash and drive India towards a cashless society. To eliminate cash, let’s analyze where the maximum cash intensity exists. While the upper middle class earns and spends digitally, the common man of India, the ‘Middle India consumers’, which are estimated to be about 400 million, spend their day using cash primarily for two purpose 1) to commute either by public bus or private and 2) for their daily expenses of food, retail, groceries. Since they earn in cash from their informal jobs, their journey starts with cash hence cash remains their defacto mode of payment. This cash which is estimated to be around $800 billion, its use in public transit stands out. It’s a daily use case for all consumers, transaction sizes are small and inconvenience is very high. Since public transit requires quick checkout owing to very high footfalls, it requires offline payments. Thus UPI solutions are out of bounds and card networks also remain least interested in acquiring small transactions.
A testament to the above mentioned behaviour is Metro Rail Corporations such as DMRC running a closed loop card program for 20 years which has millions of consumers using it for single use case of metro travel. Pre- loading the card is inconvenient and costly as there is an extensive physical network required to service such cardholders. Alternatively, had DMRC adopted an open wallet model, DMRC card could usher in micropayments revolution in NCR being a multimodal card for Transit and Retail on the lines of London Oyster, making a huge societal impact.
UPI solutions are out of bounds and card networks also remain least interested in acquiring small transactions
So in order to move to a 100 percent digitisation of the transit sector, the Government can now move to one nation one wallet. This will be a government sponsored, underwritten wallet wherein the consumer will be able to enroll using a simple EKYC process and link it to his Aadhar number and any bank account of his choice with an ACH mandate. This wallet is usable as a one month microcredit instrument for Rs.500 availed by consumers for nominal monthly flat fee. There could be limit enhancement measures built in later. It will be linked to all form factors – National Common Mobility card (NCMC) for offline payments in mass transit using tap and pay, smartphone wallet to pay using QR code in private transit and even an SMS OTP model for feature phone users. Now the government can mandate all forms of transit to accept money via this wallet. Since it is linked to all form factors of Card, QR, SMS OTP there shall be no reason for any mode of transit not to accept this. This would bring up to 200 million consumers on digital rails. It will serve as a great starting point for RBI’s efforts to popularise offline contactless payments as cards linked to this wallet will be offline NCMC cards by Rupay. Initial use of this card will be limited to government owned and operated services such as public transit, railways, paratransit, parking. Once the consumer base is built, habit formation from cash to ECash sets in, the use case can be expanded to multiple services of government and non-government ones also. This will usher in a digital revolution from bottom up. Right from a school going student using a bus for his commute to a senior citizen using transit will come on one platform. Mitigation measures to prevent defaults can be built in and now given the extensive net of digital ID for every public service, consumers will know that keeping good credit is in their interest.