Cash­less In­store Pay­ments

Ever since De­mon­e­ti­za­tion in Novem­ber 2016, In­dian cit­i­zens are more will­ing to adopt dig­i­tal pay­ments and take the cash­less route

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Ever since the In­dian govern­ment made poli­cies friendly for do­ing busi­ness in the coun­try, ‘fast grow­ing’ has be­come the mid­dle name of the In­dian re­tail sec­tor. In a De­cem­ber 2017 re­port by the IBEF (In­dian Brand and Eq­uity Foun­da­tion, a trust es­tab­lished by the In­dian Min­istry of Com­merce and

In­dus­try), it was re­ported that the In­dian re­tail in­dus­try is ex­pected to grow to USD 1,300 bn by 2020 from USD 672 bn in 2016.

To­day, a lot of hard cash still moves around in the re­tail in­dus­try. The govern­ment has been push­ing the ‘Dig­i­tal In­dia’ cam­paign to make pay­ments eas­ier and more

ac­ces­si­ble. So how does all this trans­late to a change when it comes to in-store re­tail pay­ments?

Presently, off­line re­tail such as food, travel, and shop­ping are some of the big­gest con­trib­u­tors to In­dia’s daily re­tail spend. Re­duc­ing cash de­pen­dency for th­ese low-value high-fre­quency trans­ac­tions en­sures a more con­crete ap­proach to­wards broader fi­nan­cial in­clu­sion and im­proved dig­i­tal lit­er­acy.

THE VARY­ING DI­MEN­SIONS OF IN- STORE PAY­MENT OP­TIONS

To­day, cus­tomers have a host of dif­fer­ent op­tions to make in-store pay­ments.

As one can no­tice, there is a sig­nif­i­cant in­crease in the num­ber of op­tions avail­able to cus­tomers to make in-store pay­ments and most of the new of­fer­ings are dig­i­tal in na­ture. In­creased broad­band and smart­phone pen­e­tra­tion in In­dia due to the wide­spread avail­abil­ity of low-cost smart­phones and af­ford­able data plans would fur­ther boost the adop­tion of dig­i­tal pay­ments. This also solves one of the big­gest headaches of the In­dian mer­chant – main­tain­ing petty cash and giv­ing back small change. Thanks to dig­i­tal pay­ments, no mer­chant will have to make such sac­ri­fices.

THE DUAL ROLE OF THE GOVERN­MENT AND PRI­VATE TECH COM­PA­NIES

To process high-vol­ume trans­ac­tions, set­tle in-store pay­ments and mit­i­gate se­cu­rity risks, tech­nol­ogy is the key dif­fer­ence maker. At the end of the day, shift­ing In­dia to a cash­less econ­omy can be ben­e­fi­cial for ev­ery­one – govern­ment, in­dus­tries, bankers, mer­chants, and con­sumers. So­cial ben­e­fits such as fi­nan­cial in­clu­sion, pro­mot­ing star­tups, and im­proved e-com­merce ser­vices could also be at­trib­uted to im­prove­ments in the in-store pay­ments space.

To tran­si­tion to an econ­omy where in-store pay­ment is pre­dom­i­nantly car­ried out dig­i­tally, es­tab­lish­ing an in­fal­li­ble sense of trust is crit­i­cal. Mer­chants and cus­tomers con­stantly need re­as­sur­ances that their money is safe and their data is se­cure. A mu­tu­ally ben­e­fi­cial part­ner­ship between the govern­ment and tech com­pa­nies needs to be es­tab­lished for ef­fec­tive risk mit­i­ga­tion. Ini­tia­tives such as e-KYC reg­u­la­tions for dig­i­tal wal­let hold­ers, UPI im­ple­men­ta­tions, Aad­haar-en­abled trans­ac­tions, and blockchain-pow­ered in­fras­truc­ture will play a vi­tal role in im­prov­ing data and fi­nan­cial se­cu­rity. How­ever, this can­not be done with­out the right tech­nol­ogy in place. Fin­Tech com­pa­nies and legacy fi­nan­cial in­sti­tu­tions are now work­ing hand in hand to cre­ate com­pelling ex­pe­ri­ences and in­cen­tives for users. This in­volves pro­vid­ing re­wards, cash­backs, aid­ing ‘shared econ­omy’ ser­vices, pro­vid­ing one-touch pay­ment fa­cil­i­ties, and more. The aim is to ul­ti­mately give all con­sumers an equal op­por­tu­nity to par­take in the dig­i­tal trans­for­ma­tion of the econ­omy as first-rate cit­i­zens, ir­re­spec­tive of their so­cial sta­tus. Ever since De­mon­e­ti­za­tion in Novem­ber 2016, In­dian cit­i­zens are more will­ing to adopt dig­i­tal pay­ments and take the cash­less route. NITI (Na­tional In­sti­tu­tion for Trans­form­ing In­dia) Aayog has re­ported that dig­i­tal pay­ment vol­umes recorded a CAGR of 55% in 2016-17 as com­pared to 28% in 2015-16 as a re­sult. A re­port by the Cen­tre for Dig­i­tal Fi­nan­cial In­clu­sion (CDFI) also found that around 63% of re­tail­ers are now open to uti­liz­ing dig­i­tal pay­ments. Th­ese in­di­ca­tors show that there ex­ists a huge op­por­tu­nity that must be tapped for both prof­itable as well as de­vel­op­men­tal rea­sons. Bot­tom line is – the uni­ver­sal ac­cep­tance of dig­i­tal in-store pay­ment meth­ods by mer­chants and cus­tomers will play a big role in boost­ing the Dig­i­tal In­dia pro­gram and im­prove fi­nan­cial in­clu­sion in the coun­try.

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