Budget 2017 delights Fintech startups, furthers digital economy

By Anusha Ashwin

BENGALURU: Successful entrepreneur Vijay Shekhar Sharma, Founder & CEO, Paytm, has thoroughly examined the budget. He says, "It is a digital economy budget. Government has pushed the digital theme in every area of the budget. Every person/ entity from small shops to consumers are getting pushed towards the digital economy. Tax benefits, incentives to use digital payments and extending loans based on a digital footprint will create a larger merchant ecosystem for digital payments. Incentives for labor-intensive sectors including housing, farming and dairy will help SMEs create new jobs. Focus and attention to bank NPAs, as well as increasing bank capitalization is great step towards strengthening the financial system of the country. Finally, the income tax rate changes will encourage more people to report their incomes and create a larger tax net for the country. Overall, it is a great budget that will encourage people to move to the formal economy and derive benefits."

To strengthen and regulate the digital economy, the Finance Minister has proposed to create a Payments Regulatory Board in the Reserve Bank of India(RBI) by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems.

Welcoming this move, Ramki Gaddipati, CTO & Co-Founder of Zeta, another digital payments company, says “It is encouraging to see that government is moving forward on payment system regulation. We hope the setting up of a separate payment regulatory board will help in improving interoperability and innovation. The Finance Minister also announced digital infra related measures and we hope all these steps will help more and more people joining the digital ecosystem. As expected Finance Minister made a formal announcement on the launch of AadhaarPay in today’s budget and I am confident that this will push digital payments to grassroots levels of the country.”

Jaitley had announced that Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly. This will be specifically beneficial for those who do not have debit cards, mobile wallets and mobile phones. A Mission will be set-up with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards. Banks have targeted to introduce additional 10 lakh new PoS terminals by March 2017. They will be encouraged to introduce 20 lakh Aadhar based PoS by September 2017.

Vivek Khandelwal, Vice President, Delta ID, a global supplier of iris recognition technology, welcomes the duty exemptions on iris enabled PoS devices, and says that they are truly excited about the strong emphasis the government has placed on Aadhaar enabled payment initiatives. “With all the foundations with respect to standards, certifications, and availability of devices, already in place, this impetus will further accelerate the adoption and integration of Aadhaar in programs and processes that touch the everyday lives of the people of India,” he says.

In Budget 2017 Jaitley had read out that the Government will launch two new schemes to promote the usage of BHIM App i.e., Referral Bonus Scheme, for individuals and a Cashback Scheme for merchants. BHIM App was launched to promote digital transactions and will unleash the power of mobile phones for digital payments and financial inclusion.

Sashank Rishyasringa, co-Founder and Managing Director, Capital Float, adds, “This budget is transformational at its core, aimed at propelling India towards becoming a digital economy while increasing employment opportunities and having a determined focus on rural development. The Government’s push for digitizing infrastructure is heartening. Incentivizing cashless transactions at fuel stations, hospitals and railways, rolling out 1 million PoS terminals by March and proposing a payment regulatory body to the RBI will help create a robust architecture for digital transactions. Activating Aadhaar Pay and providing referral bonuses and cashback schemes to promote BHIM will drive digital money in tier 2 and tier 3 markets.”

Varun Rathi, COO & co-Founder of Happay, a Bengaluru-based fin-tech startup that offers expense management solution for SMEs, says, “The government is working more like a startup and is quick to introduce incentives & continual iterations to ensure mass adoption, much needed for the large population sitting on the fence. The 5% tax rebate for SMEs is a great incentive, while limiting cash transactions to 3 lacs is a strategic move. It will not affect the regular transactions.”

Paynear Solutions’ CEO Priti Shah, couldn’t agree more, “This is a great move and is an encouragement to fintech companies to play a big role in the ecosystem to digitize India. Paynear is keen in having decent market share and plans to deploy more than 1.5 lakh devices this financial year,” he shares.

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