6 Ways In Which Rural India Is Transacting Online Without Internet Or Smartphones

Some existing payment and cash solutions ensure digital transactions without the need for internet, smartphones or debit or credit cards
Close-up view of colorful decorations hanging.
Close-up view of colorful decorations hanging.

To ensure that digitalisation reaches the last mile in rural India, the government and even the private sector have come up with various technological innovations which do not need internet connection. The latest in the list is the Reserve Bank of India’s UPI123Pay initiative.

These technological innovations are low-cost payment and cash solutions that offer convenience even for low-ticket-size transactions in areas where internet connectivity and availability of smartphones is a challenge. Moreover, they also do away with the need for having a debit or credit card, which are used by few in rural areas owing to lack of knowledge or fear of fraud. These services can be mostly accessed through a feature phone using features like SMS and OTP.

Here are some existing payment and cash solutions that promise to make life in rural India easier and ensure financial inclusion.

Payments Solutions

  • UPI123pay: The Reserve Bank of India (RBI) recently launched an interactive IVR (Interactive Voice Response)-based Unified Payment Interface (UPI) service called ‘UPI123pay’, which can be used even by those who do not have a smartphone or an active internet connection. Users of this service simply need to give a missed call to the pre-defined IVR number displayed on the merchant’s counter and need to do enter their UPI PIN when asked to. “UPI123Pay is a giant leap forward towards mass inclusion and extension of digital payments in a secure manner to an estimated 40 crore non-smartphone users. It democratises digital banking and removes dependence on the internet. Anyone, even with a simple feature phone, will now get access to digital banking. The proximity sound-based payments feature in the UPI123Pay app uses high-frequency ultrasound waves for data transfer between mobile phones thus it does not require internet,” says Rajesh Mirjankar, managing director and CEO, Kiya.ai, a fintech company that provides digital solutions. 
  • SMS Code Payments: Several banks and fintechs offer a payment solution called “SMS PAY”. Through this, a payment link is sent to the customer’s mobile number that can help make the payment directly to the merchant’s bank account. This payment mechanism is also used by e-commerce companies to enable people to pay for cash on delivery purchases via digital means instead of cash. “SMS payment service allows merchants to accept payments by simply sending an SMS with the payment link to their customers. Having registered with a company providing this facility, merchants can send a link with details of the payment, and customers can pay using UPI or any other payment mode. SMS payments are enabling citizens at the last mile to perform convenient and hassle-free cashless transactions,” says Anand Kumar Bajaj, Founder, managing director and CEO of PayNearby, a fintech solutions provider company.
  • Contactless Payments
  • QR Code-Based Payments: Several companies have deployed a QR (Quick Response) code-based payment solution. All you need to do is scan the QR code using any mobile payment app which supports one and then proceed to pay to the merchant.  “A QR Code makes payments almost as simple as clicking a photograph. When a QR code is scanned, the horizontal and vertical patterns of the matrix are decoded by the software on your smartphone and converted into a string of characters. These characters when opened as Scan to Pay provide a string command that provides the details to the host (an app or browser),” says Mirjankar. 
  • Point of Sale (POS) Machines: These have been around for quite some time. POS machines enable a user to pay via debit or credit cards. It eliminates the hassle of carrying large sums of cash for both the customer and the merchant. “A POS machine is one of the most advanced payments accepting devices. The biggest advantage of a POS machine is its ability to offer digital payment avenues to the last mile and the option to go cashless. It accepts all kinds of credit and debit card payments and issues receipts along with maintaining transactions. Since the complete process is digital, it eliminates human errors and helps manage and track inventory in real-time,” says Bajaj.
QR Code Payment Mechanism

Cash Solutions

Rural India remains largely cash-driven, yet the number of ATMs in far-flung places is much less than in urban areas. “While India has around 650,000 villages, there is only one ATM, on an average, for 10 villages,” says Dilip Modi, Founder, Spice Money, a rural fintech company. Aadhaar-based ATMs and micro ATMs solve this challenge to a large extent.

Digital Payments
  • Aadhaar-Based ATMs: Several fintech companies have launched Aadhaar Enabled Payment System (AEPS) services, which work like a micro ATM and are provided using a laptop and biometric scanner. The user needs an Aadhaar number and a linked bank account to withdraw or deposit cash through this service. You can also transfer funds using this service to other Aadhaar-linked bank accounts. “AEPS is a bank-led financial service model through which we can conduct online financial transactions using micro-ATMs with the help of Aadhaar-based authentication. This can be used by authenticating all account holders who have their Aadhaar cards linked to their bank accounts. AEPS supports transactions only between Aadhaar-linked bank accounts,” says Modi.
  • Micro ATMs: Several banks and companies are also working towards a secure micro ATM network through business correspondents (BCs). They help people withdraw, deposit, transfer funds, and check their balance using an OTP-based service through their feature phones. “Micro ATMs are devices that are used by merchants/ nanopreneurs for providing basic banking services including cash withdrawal. Mostly these merchants are local kirana shop owners and they act as a point of contact to conduct instant cash transactions. Micro ATMs are connected to banks across the country,” says Modi.

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