How successful are digital payments amid limited internet access

In spite of many companies opting for digital payments for transactions post demonetization, limited internet access may still create hindrance for smooth inflow of cash. Let's find out more..
Digital payments post demonetization

It may have been over a year since the Modi government envisaged a digital India, but the actual availability of digital payment options is still low among many retailers, especially kirana store owners.

The push for cashless India has been phenomenally high ever since the note ban was enforced. However, even after a year, retailers and consumers are finding problems in digital transactions due to limited internet, a recent survey has concluded. The survey ‘Going Cashless’ was carried out by Indian Institute of Management-Bangalore (IIM-B) in association with Centre for Digital Financial Inclusion (CDFI). According to the findings of the survey, post demonetization, ownership of mobile phones was substantially high among consumers and retailers. As much as 94% retailers and 85% consumers, including in urban and rural areas, were found to possess mobile phones. Despite such high penetration of mobile phones, lack of infrastructure for digital payments deterred consumers and retailers from using mobile payments, the survey said. 

Observing that mobile phone payments are playing a key role in digital payment platform, CDFI executive director, Krishnan Dharmarajan, in his report, writes, “Innovations in digital payments space predominantly uses mobile phone. Digital payment options using mobile phones today have become so common that even traditional players such as card technology and payment service providers have been forced to rethink their digital payment instruments to accommodate mobile phones.”

He further said that there was a huge untapped potential for mobile payments at unorganized kirana stores, where most Indians go to fulfill their daily needs.

“As much as 94% of shopkeepers have mobile phones, of which only 41% have access to smartphones. The recent influx of low cost smartphones bundled with internet should further push the surging interest in digital payments across both rural and urban India,” he suggested.

The survey found that mobile phone penetration was highly widespread in locations with both sizeable and moderate consumption levels in urban and rural areas.

The survey highlighted that post demonetization despite the intent amongst retailers to adopt cashless transactions, actual availability of digital payments options were low due to lack of infrastructure, non-availability of POS devices, procedures for obtaining a POS device, documentation, lead times, digital and financial literacy which made the process a little difficult and far-fetched.

 D.Krishna Sundar, chairman, Digital Innovation Lab, IIM-B, said: "To get closer to a cashless economy, it is important that the number of digital transactions increases across the country amongst all segments and through a variety of payment options. Since one of the main contributors to the cash-based economy is the unorganized retail sector, this is a segment which cannot be ignored in the cashless journey.”

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