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What is FASTag? Why is the government making it mandatory?

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The rage has just begun!

The Government of India has made it mandatory for all vehicles to have a FASTag installed by January 15, 2020. Currently, toll collection happens majorly via cash, leading to long queues at major highways. The e-toll collection method has been operational for a few years but adoption has been at a snail’s pace. Now, the authorities want to make it a compulsion for all vehicles. But, what is a FASTag? How can you get one? And, will it help in reducing traffic jams at toll collection points?

FASTag – A RFID enabled wireless payment solution

FASTag is a small sticker that needs to be stuck on your car’s windshield. The sticker employs Radio-frequency Identification (RFID) technology to identify the vehicle and its associated payment option. When the sticker is scanned, the operator can directly debit toll charges from your bank account or attached wallet. This system eliminates the need for a manual point of sales machine for debit or credit cards and is extremely fast.

Toll booths are now equipped with RFID scanners and can automatically deduct toll charges within seconds. Users need to ensure that the tag’s online wallet has sufficient balance and can easily top-it-up like any other utility. All toll collection points in India are being upgraded to have at least 75% lanes reserved for ETC (Electronic Toll Collection) tags.

Originally, FASTag was planned to become mandatory from December 1. The government, however, recently extended the deadline until January 15 to give enough time to vehicle owners and toll plaza authorities to cope with the changes.

How can you get a FASTag?

Major automobile companies in India are by default offering FASTag RFID tag on new vehicles. However, if you aren’t among those who have purchased a brand new car or jeep recently, you can purchase a FASTag from various sources.

FASTag is available via multiple online platforms including Paytm and Amazon. The tag is also available at various banks including Axis Bank, SBI, HDFC, ICICI Bank and more. While ordering, keep the Registration Certificate (RC) of the vehicle handy because you’ll have to submit a few details about the vehicle.

You can also get the sticker from government petrol pumps like Indian Oil, Bharat Petroleum and Hindustan Petroleum. And obviously, the tag will also be available at the toll plazas.

Once you have bought a FASTag, you need to apply it to the windscreen of your vehicle and then link it to your existing bank account to enable automatic deduction of toll payments upon crossing a compatible toll plaza. If you don’t want to link your bank account, you can use Airtel on Paytm’s wallet.

What are the benefits of FASTag?

At present, 46% of all toll transactions are taking place via FASTags and the government is hopeful that it will be able to achieve 90% penetration in one month.

Earlier the government planned to make all lanes across India FASTag compliant. However, it has decided to keep 75% lanes reserved for ETC and 25% hybrid lanes for cash as well as other modes of payment.

Currently, a non-commercial four-wheeler takes about five to fifteen seconds to cross a toll via cash. This is just the transaction period though. A large number of cars transit every day and each one of them blocks the lane for a considerable period. Thanks to ETC, a vehicle can smoothly pass through without a pause, or a maximum stop of a couple of seconds is enough for the scanners to read the RFID tag.

This will be exceedingly handy in high-density areas like New Delhi – Gurgaon expressway, Mumbai entry-exit points, and all other highways across India. Electronic collection of the toll will also ensure there’s maximum transparency in accounting.

The push to digitize toll collection will also indirectly force users to rely more on electronic means of transactions — bank accounts and wallets. For these micro-transactions, Indians love to use cash. And, this leads to a sizeable unaccounted flow of cash in the markets. Slowly converting every transaction to digital means will ensure a higher grade of accountability.

The roll-out of FASTag has been done under NPCI’s (National Payments Corporation of India) National Electronic Toll Collection program. The program brought together a plethora of stakeholders ranging from highway operators to banks. Interestingly, NPCI is also the consortium behind India’s highly successful Unified Payment Interface (UPI).

There have been a lot of questions about the reliability of the system. What if the system goes down and there’s havoc on the road? To address this concern, we need to consider that NPCI is the one looking after the electronic systems. It has a stellar up-time record with UPI so far and its other products like RuPay also offer world-class performance.

A key part of Digital India

Digital India a key project for the Narendra Modi-led government and it has rolled out a range of products to cater to India specifically. NPCI is the leading consortium that’s also behind RuPay, IMPS, and UPI.

RuPay has been a successful alternative to foreign network partners like Visa and MasterCard. The competitive cost advantage has led banks to offer zero-balance bank accounts to everyone. Similarly, UPI strives to reduce dependence on cash and encourage digital transactions. As a developing economy, we need to improve efficiency at every point. These few initiatives shall pay-off well in the future.

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