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Government launches Bharat QR code

The Union Government has launched Bharat QR code, a quick response (QR) code to enable digital payments without card swiping machines.

It is world’s first interoperable payment acceptance solution launched by Indian Government to move towards less-cash economy.

Key facts
  • Bharat QR code has been developed by jointly by National Payments Corporation of India (NPCI), Visa, MasterCard and American Express under instructions from Reserve Bank of India (RBI).
  • It works as common interface for the MasterCard/Visa/RuPay platforms and also facilitate acceptance of Aadhaar-enabled payments and Unified Payments Interface (UPI).
  • It enables person to make payments to retailers without using the merchant’s ID or number. It eliminated need of using card swiping machines making digital payments.
  • Using, BharatQR code merchants will be required to only display one QR code instead of multiple ones. Users can make payment by scanning the code.
  • BharatQR code is of two types static and dynamic. In static QR code, first code need to be scanned and then amount is entered to make payment.
  • In case of dynamic QR code, new QR code will be generated in real time for every transaction. In this case there is no need to enter the amount. The payment is just made by scanning and entering the PIN.
 What is QR code?
  • QR code (Quick Response code) is a two-dimensional (matrix) machine-readable bar code made up of black and white square. This code can be read by the camera of a smartphone.
  • It is used for storing URLs or other information that link directly to text, emails websites phone numbers. It is capable of 360 degrees (omni-directional), high speed reading.
  • QR Code can store up to 7089 digits as compared to conventional bar codes which can store max 20 digits. It encodes same amount of data in one-tenth the space of a traditional bar code.
  • It carries information both horizontally and vertically. It has error correction capability and data stored in it can be restored even if it is partially damaged or dirty.

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Union Cabinet approves ordinance to pay salaries by cheques

The Union Cabinet has approved a draft ordinance to empower states and allow industries to pay workers’ wages digitally, through a direct bank transfer to accounts or by cheque in a bid to encourage cashless transactions.

The draft ordinance proposes changes to the Section 6 of the Payment of Wages Act, 1936 to encourage cashless transactions. It will need the President’s assent to become law as per article 123 of the Constitution.

Key Facts
  • It will allow industries to pay wages to workers earning up to Rs. 18,000/ month, without taking their explicitsalary consent as required under present Act.
  • However, wage payment through the banking system will only be optional, until State governments or Union Government come up with a notification for specific industries since Labour is in the concurrent list.
  • The present law (1936 Act) states that all payment of wages should be in cash. Under it has mandatory provision asking employers to obtain written permission of the worker to pay either by cheque or by crediting wages to his or her bank account.
Comment

The payment of wages through cheque or DBT of employed persons has twin motives  i.e. it will reduce complaints regarding non-payment or less payment of minimum wages and serve purpose of digital and less cash economy. The move is significant in view of the Union Government is promoting cashless transactions after its decision to scrap the old high value Rs. 500 and Rs. 1,000 currency notes. Earlier Payment of Wages (Amendment) Bill, 2016 introduced in the Lok Sabha during 2016 winter session but was not cleared owing to the impasse in Parliament.

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Recommendations of Ratan Watal Committee for Digital Payments

The Committee on Digital Payments headed by Ratan P. Watal has submitted its final report to the Union Finance Ministry.

It was 11-member committee notified in August 2016 by the Finance Ministry. It was tasked to review existing payment systems in the country and recommend appropriate measures for encouraging Digital Payments.

It was having representatives from Reserve Bank of India (RBI), Unique Identification Authority of India (UIDAI), tax department and various industry bodies in the payments space.

Recommendations
  • The Committee has recommended medium term strategy for accelerating growth of Digital Payments in India.
  • The strategy must be backed with regulatory regime which is conducive to bridging the Digital divide by promoting competition, interoperability and open access in payments.
  • It also recommends inclusion of financially and socially excluded groups and assimilation of emerging technologies in the market.
  • It calls for need of safeguarding security of Digital Transactions and providing level playing to all stakeholders and new players who will enter this new transaction space.
  • It has suggested inter-operability of payments system between banks and non-banks, up-gradation of digital payment infrastructure and institutions.
  • It also recommends a framework to reward innovations for leading efforts in enabling digital payments.
  • Greater use of Aadhaar and mobile numbers for making digital payments as easy as cash.
  • Called for inter-operable payments between bank and non-banks as well as within non-banks.
  • Proposed to make regulation of payments independent from the function of central banking to give the entire digital payments boost.
  • Give Board for Regulation and Supervision of Payment and Settlement Systems (BPSS) independent statutory status within overall structure of RBI.
  • Called for amendments to the Payments and Settlement Systems Act, 2007 to provide BPSS explicit mandate for competition and innovation, consumer protection, open access and interoperability, regulations on systemic risks and data protection.
  • Operations of payment systems like National Electronic Fund Transafer (NEFT) and Real Time Gross Settlement (RTGS) can be outsourced after a cost benefit analysis.

watal-recommendations

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