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> Posted by Jeffrey Riecke, Communications Assistant, CFI
Electronic payment systems are spreading so rapidly they’ve become a challenge to size up. Payment cards have been around in some form since the early 20th Century, but their outreach is still far from ubiquitous, even in countries like the United States. To get a sense of where we stand with the expansion of modern payment systems, I compiled some recent statistics from around the world.
In the United States, employers are increasingly using electronic payment cards to distribute compensation. As compared to checks that require processing, the cards receive funds immediately, and can be used like any other payment card to make purchases, transfers, and withdrawals. In 2012, more than $34 billion was loaded onto 4.6 million active payroll cards. By 2017, this is expected to grow to $69 billion over 10.8 million cards.
Electronic payments are experiencing rapid outreach in India in part through the government’s Aadhaar identification card initiative. Increasingly banks are accepting the biometric information-backed Aadhaar numbers as adequate Know-Your-Client information, and as part of its financial inclusion report released last week, the Reserve Bank of India (RBI) Committee on Comprehensive Financial Services for Small Businesses and Low Income Households recommends that every individual over the age of 18 receive an electronic bank account when they’re issued an Aadhaar number. As of December 2013, about half the country’s population had enrolled for the identification cards. The RBI plans to have the entire adult population enrolled in the system by January 2016. Among their utilities, the cards are being used to distribute social benefits of the government’s Direct Benefit Transfer scheme. A recent UBS Securities report estimates that the efficiencies gained from the card-based social benefit system could total up to 1.2 percent of India’s GDP.
Last month the Delhi government launched Saral Money, a payment product that helps to fill in the financial inclusion gap for individuals who don’t have the required identification verification documents to open a bank account. With Saral Money, one can open a basic account with one of India’s most prominent banks using just an Aadhar number. Aadhar numbers, issued by the government on a volunteer opt-in basis, are unique 12-digit identification numbers linked to an individual’s demographic and biometric information. Governance Now has more on the story through their post Next Aadhaar in Financial Inclusion: Saral prepaid card, which is copied in part below.
Delhi government on Wednesday launched the ‘Saral Money Prepaid card’ to provide banking services to those people who are unable to open a bank account due to lack of supporting documents for their ‘know your customer’ (KYC) verification. Saral has been launched by five of India’s prominent banks namely Axis Bank, HDFC Bank, ICICI Bank, Indian Overseas Bank and State Bank of India in collaboration with the payment gateway provider, Visa and Aadhar.
To open a bank account with the above five banks and to get a Saral Money Prepaid card, a person will now just have to produce the Aadhar card to fulfill the KYC norms. The limit of such accounts will be Rs 50,000 and the customer will be able to do cashless transactions with the help of the Saral card at the many authorised places in the city.
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