The Second meeting of the Committee of Chief Ministers on adoption of Digital Payments was held on Friday, 9th December 2016 at NITI Aayog .The meeting followed the deliberations held by the Chief Minister of Andhra Pradesh, Vice Chairman of NITI Aayog, VC, NITI Aayog, CEO, NITI Aayog, Secretary, Ministry of Electronics and Information Technology (MeitY) and DG, Unique Identification Authority of India(UIDAI) with the Governor and senior management of RBI and CMDs of major private and public sector banks on 8.12.1016 in Mumbai.

Maharashtra Government informed that it was introducing an Aadhaar Bill in the legislative assembly to give legal status to the use of Aadhaar number for various purposes. It also informed that it had launched a major campaign to promote digital transactions. Madhya Pradesh Government reported that it had initiated a major program to digitize the transactions in government mundies. Odisha Government pointed out that the state was deficient in financial infrastructure including bank branches, bank correspondent, Internet penetration and mobile phones.

The Committee took cognizance of the slew of measures taken by Ministry of Finance to incentivize use of digital payments and noted that further steps are required to make digital transactions attractive vis-à-vis cash transactions.

While noting that RBI and banks are largely supportive of the measures, the Committee of Chief Minster on adoption of digital payments endorsed the following decisions:

§ In order to ease the digital payment operations at the level of merchant, UIDAI would shortly roll out the common Android based Aadhaar Enabled Payment System (AEPS) application developed in collaboration with TCS that can be downloaded by the merchants. In order to use this Application for carrying out cashless transactions, merchants will need a smartphone and a fingerprint scanner. Transactions on this application can be done without any card or PIN. The application would be made available to all banks and the banks would encourage merchants in their vicinity to adopt this application.

• RBI should allow authentication through iris scanner and One Time Password (OTP) for AEPS.There should be no charge on AEPS transactions.
• Inter-operability of all pre-paid instruments on the United Payments Interface(UPI) platform alongwith a common QRCode would greatly simplify transactions.
• The Merchant Discount Rate (MDR) regime needs to be streamlined. To popularize digital transactions the Committee proposed a detailed review of the MDR regime, inter-linking of various digital payments platforms such asUnstructured Supplementary Service Data (USSD) with UPI, self-boarding by small merchants and a common application for UPI, etc.
• Procedure for simplified Know Your Customer (KYC) using Aadhaar needs to be adopted.
• Upgraded version of USSD should be rolled out by 25.12.2016.

The Committee also considered the issues relating to procurement of equipment like Point of Sales (PoS) machines and Micro Automatic teller Machines (ATMs). It was decided that Secretary, MeitY will prepare a status note on the procurement options for these devices.

The Committee took note of the Subsidy Scheme implemented by NITI Aayog to directly disburse funds to District Collectors based on their performance. The Committee decided to recommend to the Government that the first 50 Gram Panchayats that become cashless should be honoured. It was also decided to designate specified villages as Cashless Transactions (CLT) villages on the lines of Open Defecation Free (ODF) Villages. An accreditation system for certifying villages as CLT may be developed.

In order to address security concerns relating to digital payments, it was decided that MeitY would constitute a committee under the chairmanship of Secretary, MEITY and Secretary, Department of Telecommunications (DoT)to examine various security concerns relating to digital payments and recommend measures to address the issues.

In a follow-up meeting of the Chief Minister of Andhra Pradesh and VC, NITI Aayog with the major telecom companies, the need to address issues relating to sufficient bandwidth for financial transactions, last-mile connectivity, affordability and security of digital transactions was discussed and several action points were identified.

The Committee of Chief Ministers has been set up by NITI Aayog to examine and promote the adoption of digital payment systems across the country. Andhra Pradesh CM Chandrababu Naidu is the Convener of the Committee with Chief Ministers of Madhya Pradesh, Odisha, Maharashtra, Puducherry and Sikkim along with the Vice Chairman and CEO NITI Aayog with five experts including the former Chairman of UIDAI, Nandan Nilekeni are its members.

Aadhaar Enabled Payment System rollout to merchants enables biometric, cardless cashless transactions and mandates bank adoption. The Committee endorsed operational measures to accelerate cashless transactions by rolling out a common Android-based Aadhaar Enabled Payment System (AEPS) for merchants requiring a smartphone and fingerprint scanner to enable cardless, PIN-less transactions, with banks promoting its adoption. It recommended allowing iris and OTP authentication for AEPS with no transaction charges, integrating prepaid instruments on the Unified Payments Interface (UPI) with a common QR code, reviewing the Merchant Discount Rate regime, adopting simplified KYC using Aadhaar, upgrading USSD, and examining procurement options for POS and micro-ATMs; a security committee was tasked to address payment security concerns.