Revolutionizing Digital Transactions: The Impact of One Nation One Card (ONOC)

India, with its ambitious digital transformation agenda, has taken another significant step towards a cashless society with the introduction of the One Nation One Card (ONOC). Launched by Prime Minister Narendra Modi, this initiative aims to enhance the usage and accessibility of debit cards, making cashless payments a seamless experience across various modes of travel and transactions.

Current Challenges with Debit Card Usage

Despite having 920 million debit cards, the usage of these cards is far from optimal. On average, they are used only 1.4 times per month, and significantly, two-thirds of these transactions are for cash withdrawals at ATMs. This conservative usage hinders the progress towards a cashless and more digitized economy. We Indians primarily use debit cards for withdrawing cash, which is far from the intended purpose of promoting card-based transactions for various daily needs.

Enter One Nation One Card (ONOC)

The One Nation One Card (ONOC) is a groundbreaking initiative designed to overcome these challenges. It is a traditional debit card with additional contactless payment capabilities, allowing users to tap and go for seamless transactions. This framework leverages the EMV Open Loop Card with stored value model, ensuring secure and fast digital payments.

Understanding the Framework

EMV: The Global Standard for Card Payments

EMV, or Europay, Mastercard, and Visa, is a global standard for card payments that supports enhanced safety and fraud detection features. This technology ensures that transactions are secure and reliable, providing peace of mind to users. The EMV standard is widely adopted and adhered to worldwide, making it a cornerstone for card-based transactions.

Open Loop Cards: Interoperability and Convenience

An open loop card is an interoperable card that can be used widely across different merchant networks. Examples include most debit and credit cards. In the event of loss or theft, open loop cards can be blocked, and the funds linked to them remain secure. This feature offers a level of convenience and security that traditional debit cards often lack.

Stored Value Cards (SVC): Prepaid Money Cards

Stored Value Cards (SVC) are prepaid cards in which the monetary value is stored on the card itself. These cards, like gift cards, metro cards, or telephone calling cards, do not rely on a central database at a bank. However, in case of loss or theft, the linked funds are also lost. Unlike traditional stored value cards, the NCMC framework does not require elaborate Know-Your-Customer (KYC) procedures, making it more accessible and user-friendly.

The NCMC Framework: A Blended Solution

The National Common Mobility Card (NCMC) framework seamlessly combines the benefits of both contact and contactless payments in a single card. Going forward, RuPay cards built on this framework can be issued by any of the 25 large banks as debit, credit, or prepaid cards. This diversity ensures that banks and financial institutions can cater to the varied needs of their customers.

Here are the key advantages of the NCMC framework:

Contactless Payments: Ideal for low-value transactions such as bus fares, ferry tickets, metro rides, highway tolls, parking, cafes, groceries, and taxis. Contact Payments: Perfect for higher-value transactions at shopping malls, ATMs, and diners. Online Transactions: Suitable for e-commerce, EMI payments, and NEFT/RTGS (National Electronic Funds Transfer/Radio Transfer of Funds) transactions.

Currently, only about 15 million of the 920 million debit cards in the country are NFC contactless enabled. Additionally, out of the 3.7 million Point of Sale (POS) terminals, only about 900,000 support NFC payments. This substantial gap presents both a challenge and an opportunity to accelerate digital payments.

Potential for Future Growth

Considering the potential for growth, NCMC cards could also be made available as wearable accessories. For the urban commuter, this could potentially triple the number of card transactions in the near future. This initiative aligns with India's goal of achieving a cashless economy and underscores the potential of NCMC to drive digital transformation.

Given the success of systems like UPI (Unified Payments Interface) and RuPay, the NCMC framework may well be the next big breakthrough in the Indian payments ecosystem. With its innovative approach to addressing the limitations of traditional debit cards, the ONOC initiative has the potential to transform the way we conduct our daily transactions.

To explore this ambitious project further, you can delve into a conclusive opinion-article on the topic, published on the Infosys Finacle blog.

In summary, the launch of the One Nation One Card (ONOC) initiative marks a pivotal moment in India's journey towards a more digitized and cashless future. By addressing the limitations of current debit card usage and leveraging advanced EMV technologies, this initiative holds the potential to significantly enhance the efficiency and accessibility of digital transactions.