Implications of Emerging Electronic Payment Systems in India: A Strategic Overview
Bibliographic record
Abstract
IntroductionThe last two decades have witnessed significant reforms in our payment and settlement system. Technology has driven far-reaching changes, slowly replacing older methods of payment with a number of innovative methods. These innovations - what people refer to as electronic payment systems - are reshaping the payment processes. They are influencing users in the choice of payment instruments, making retail transactions easier and cheaper for customers and challenging the lead role of physical cash in retail payments. However, there are other implications too. For the Reserve Bank of India (RBI), it raises several policy issues - it impacts seigniorage revenues of the RBI; implementation of monetary policy; and the reliability, soundness, and effectiveness of the retail payment mechanism. Although a number of studies have discussed the potential of electronic payments to replace traditional cash or paper based payments, there is little theoretical or empirical work on the implications and risks associated with electronic payments, especially in India. This article is an attempt to ascertain the implications that substitution of cash payments by different electronic payment media has on cash usage, monetary policy, and operational activities; systemic risk and security issues; and necessary technological and regulatory changes in the Indian context. It then provides possible policy responses to the challenges these systems pose. It contributes to the literature by relating a technological innovation to its practical implications for the nation's economy and its legal and regulatory system, and it sets an agenda for future research.The article consists of four parts: The first part reviews the relevant literature and discusses the methodology. The second part describes electronic payment systems and trends in the growth of electronic payment systems, and it examines the policy issues and challenges arising due to development of such systems. The third part reviews the possible public policy responses to such implications by the RBI. The fourth part presents the conclusions and outlines areas requiring further research.Recent Studies on Electronic Payment SystemsHancock and Humphrey (1998), in their study, comprehensively discussed the steady and significant change from paper-based systems to e-payment systems and its impact on cash use, cash holdings, seigniorage, demand for money, risks in the payment system, payment system efficiency, and monetary policy issues. Bradford et al. (2009) discussed the changing risk profile of payment systems and their increased vulnerability due to the growing role and significance of non-banks in retail payments after the introduction of e-payments in the United States and Europe. A recent study on the impact of recent payment innovations on cash usage in Canada (Fung, Huynh, & Sabetti, 2011) found they do have a significant negative effect on cash usage in Canada. The Committee on Payment and Settlement Systems (2012) Report provides insights into innovations in retail payments and states that they cut processing costs and increase social welfare but also raise serious policy issues for Central Banks as they impinge on the responsibilities and tasks of central banks as catalysts and supervisors of payment systems.MethodologyThe article attempts to discuss conceptually the divergent impacts of the increasing substitution of cash payment systems by electronic payments systems in India. It then discusses the policy issues arising from such developments to understand the implications and decide on the necessary future action.To study the emerging trends in payments, this research uses secondary data. The Websites of the Reserve Bank of India, the Bank of International Settlements, and reports of the Committee on Payments and Settlement Systems provide the data on the share of paper based vs. electronic transactions. The article uses statistical methods for analysis of this data and a multiple regression model to establish the relationship between value of currency in circulation and growth in electronic payments as well as the total number of transactions by non-banks. …
Fetched live from OpenAlex and de-inverted. Abstracts are not stored in this database: the inverted indexes are 8.6 GB of the frame’s 9.3 GB of text, and the host has 13 GB free.
How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.004 | 0.000 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.001 | 0.002 |
| Science and technology studies | 0.000 | 0.000 |
| Scholarly communication | 0.000 | 0.001 |
| Open science | 0.001 | 0.000 |
| Research integrity | 0.000 | 0.001 |
| Insufficient payload (model declined to judge) | 0.000 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".