First Data Shows How Electronic Payments Can Support the Growth of Government Payments

Nitish Asthana

The growth in internet penetration and electronic payments has the potential to improve governance and make it easier for citizens to interact with government agencies and avail of public services. First Data & ICICI Merchant Services’ Nitish Asthana discusses how electronic payment can be leveraged as part of e- government programs to improve services to citizens across the country.

E-Governance is a comparatively recent phenomenon, but within a short period of time, the Indian Government has embarked on a program that makes it easier for people to access information and avail public information online. Considerable progress has been made in the online provision of government information to citizens. It is becoming more common for this information to be organized around people’s needs, rather than around administrative structures, making it more accessible and useful for citizens.

The services where e-payments have made significant progress are utilities (electricity, water and gas), rail transportation, education, taxes and municipal dues. Several government organizations have started to make a range of documents and forms available online. These can be viewed online and/or printed offline, with some applications allowing for online submission of forms.

The e-Advantage (alignment)

Consumers experience tangible benefits by paying for services online. They no longer have to visit multiple government offices or stand in queue to pay their bills or seek information. Rather, this very convenience has led to rapid adoption of online payment modes.

The government benefits from making available consumer-centric services online. This ensures that the necessary process controls are not compromised, productivity and efficiency are increased, and customer service levels are improved. The sheer volume of transactions that can be handled electronically will increasingly allow the government to focus on other development issues and on improving the quality of service. It also helps the government increase its revenues for services that are paid for.

Handling large amounts of cash is known to increase pilferage and fraud, which are both reduced by electronic payments. Less cash not only means reduced costs, but using electronic payments also keeps manual intervention to a minimum. Such a system in-turn makes the service almost completely error-proof and improves financial reconciliation.

The e.change is here to stay

One of the biggest beneficiaries of online payments is Indian Railways. Today, online railway ticket booking on its website is a success story. On March 1, 2013 the Indian Railway’s website set a new record by booking over 5 lakh tickets. The Railway Ministry, seeing the growth in traffic on this website, has announced a revamping of the site from financial year 2013-14 to increase the booking rate to 7,200 tickets per minute from its present level of approximately 2,000 tickets per minute. This service gives consumers several e-payment options, including debit and credit cards. By the end of this year, the site will be able to handle 1.2 lakh users at any point compared to the current 40,000 users it handles.*

Online tax submissions have increased significantly as more than 25% of tax returns are now e-filed. Municipal dues are increasingly being paid electronically and a large number of public service jobs can be applied for online. Most electricity and water boards accept online payments through debit cards, credit cards and net-banking. More and more government educational institutes are providing fee payment options on their websites. Metro rail is launching an innovative stored value card with tap-and-go features that provide quick access to regular passengers. Even the public distribution system is piloting a closed-loop payment system of distributing and procuring material and inventory over a widely distributed network.

Overall, card payments in the government sector are growing by more than 80%. E-payments will be the future and a driving force behind the vision of a less-cash economy. The change is everywhere.

Taking the next leap

As consumers demand more and more government service online, public departments must work closely together to replicate successful e-payment models that work in other departments or geographies. With lower transaction costs being prescribed by card associations (Visa, MasterCard), government departments should take advantage of the lower cost of processing electronic payments.

Banks, acquirers and payment gateway providers have an important role to play in enhancing the convenience, speed and safety of providing e- payments. These service providers need to make available a comprehensive set of payment options on the department’s website such as credit card, debit card, net-banking and Standing Instructions.

Reducing transaction time and transaction drops is critical for faster payments and user convenience. Providers are enhancing their technology to reduce the number of hops in the transaction. Points of failure need to be addressed, and a highly available platform ensures that each vulnerable point is covered with a fail-safe. Strong analytics are required to provide the government merchant with robust accounting and reconciliation.

Online payments in India are already more secure compared to many other countries, with 3D Secure/ One Time Password authentication being mandated by RBI. This ensures that a transaction is accompanied by two levels of authentication, thus making them doubly safe for users.

With wireless internet access and broadband becoming the standard, government agencies should capitalize on the web’s reach to provide consumers with more convenient payment options. E-payments in government services can grow manifold when public authorities cooperate on a nationwide basis to replicate success stories. The core objective must be to simplify and speed- up transactions whilst keeping them secure. E-payments in government are central to the less- cash effort.

ICICI Merchant Services (a joint venture between First Data and ICICI Bank) provides payment gateways to various government institutions in order to ease the burden of sending and receiving funds.

About the Author

Nitish Asthana is Executive Director, First Data- ICICI Merchant Services and heads the merchant acquiring business for First Data India-ICICI Merchant Services.