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Five Ways to Stimulate Electronic Payments (Hint: Discouraging Cheques Is Not One Of Them)
The number of times the words "should" and "charge" appear in this article titled "RBI WANTS TO DISCOURAGE USE OF CHEQUES" got me wondering if "negative reinforcement" is seen as the only way to wean people away from their time-worn habit of using cheques and move them to electronic payments. For the uninitiated, RBI, or Reserve Bank of India, is India's central bank cum regulator of the Indian banking industry.
Instead of solely contemplating measures to ban cheques for multifarious transactions and levy a charge for permitting their use in the others, I wish RBI and the banking industry in India focused their efforts on finding ways to directly stimulate the use of electronic payments. With that approach, I'm sure that they'd accomplish the desired shift from cheque to electronic payments a lot faster and in a manner that is more agreeable with payers and payees, who are the two most important stakeholders in a payment.
While it's easy to agree with the article's assertion, "with electronic payments catching up, cheque usage will come down", the growth in electronic payments is not going to happen by accident. Individuals and corporates have been accustomed to using cheques for a long, long time and will switch to electronic payments only if they find a compelling reason to do so. IMHO, it's the responsibility of the banking industry to provide that reason.
Based on my experience of using cheques and electronic payments in both my personal and professional life for several years, let me suggest the following "positive reinforcements" for spurring greater adoption of electronic payments by retail and corporate banking customers alike:
Raising transfer limits and modifying the authorization process are two more ways that could help increase the adoption of electronic payments - more on them in a follow-up post.
While each bank might need to conduct a detailed study to evaluate the feasibility of implementing the above measures in the context of its own business processes and IT landscape, I hope my list serves as a useful starting point.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Sergiy Fitsak Managing Director, Fintech Expert at Softjourn
14 August
Oleksandr Strozhemin Co-founder and CEO at Trinetix
13 August
Elaine Mullan Head of Marketing and Business Development at Corlytics
12 August
Abhinav Paliwal CEO at PayNet Systems- A Neo Banking Software Platform
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