Can Credit / Debit Cards Help Fight Corruption ?

In an article in NewYork Times, I read that the government of South Korea to fight corruption made it almost mandatory for all enterprises in the country to accept credit cards and offered huge tax incentives in return for everybody using credit cards. As a result in 2006, half of the $491 billion in private consumption was settled through credit card.

South Korea has 403,000 electronic cash registers for every million people which allows them to pay by credit / debit cards. Compare this to Japan which has mere 10,765 such terminals for every million people in the country. The program was a huge success in South Korea due to its educated and technology aware people. Credit cards are accepted at all the places from gas stations to hospitals. Most credit cards offer incentives which has now become a way of saving for the consumers.

Can this happen in India ? Well in parts it may, but rural India which forms the bulk of our economy is largely uneducated and with the Reserve Bank of India sleeping on credit card reforms and letting Banks and CC Companies rip off customers, we need to tailor the mechanism and develop a transparent e-Transaction system.

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