One state at a time to achieve the e-payment dream of India

Back in 2011, Kerala a state in Southern India achieved a breakthrough. The Government in Kerala wanted to make the state, the first ‘Total Banking’ state of India. Kerala was successful in getting the entire population into a banking network. To break it into simple steps, 14 districts of Kerala, home to 33 Mn people and 6.5 Mn households had at least one bank account. The Government of Kerala was working on this initiative since 2007 and it took them 4 years to achieve this feat. Kerala always had 100% literacy rates for a while now and it might have had a indirect impact of getting this program executed.

What’s interesting is that, to add to its many firsts, Kerala in September 2013 has become one of the first states in India to roll out e-Payment Gateway. This enables people in Kerala to make cashless payments for paying for services such as utility bills, paying tuition fees, buying motor vehicle insurance, accessing multiple government departmental services ,etc. Approximately 23 services which are part of e-district project can be accessed through the e-payment gateway according to Times of India, a news daily from India.

One of the official release stated that over 66 banks have been identified for the e-Payment Gateway initiative, through which payments made through debit and credit cards are accepted.

The pilot for this project was completed back in December 2012. Kannur and Palakkad, two districts in Kerala were selected to participate in this initiative which turned out to be successful according to Oomen Chandy, Chief Minister of Kerala.

The Government of Kerala is also set to become the first state which has entire population registered under Aadhar (Unique Identification) scheme. Nearly 70% of the Kerala’s population have their own UID’s and the state is aiming at achieving a 100% coverage rate in the next few months.

LTP View: According to a report released by Visa, electricity payments and tuition fees fall into the top 5 non-cash payment segments in India. The move to tie up with electricity board and educational institutions for cashless payments could impact the adoption rate of cashless payments in India, especially Kerala. It would also be quite interesting to watch how such initiative of moving to e-payments would influence other states in India to adopt such practice and how soon an effort to make this switch will be made. Karnataka is another leading state in terms of e-governance and m-governance. we will be discussing about Karnataka's payment initiatives in one of the future posts.