‘It took 20-25 yrs for US to go cashless’

Jack Ringquist, global leader, consumer products, Deloitte, was recently in Mumbai.

Firstpost.com spoke to him on the likely impact of demonetisation on consumers and India's switchover to cashless economy.

Ringquist talks about how the US took time to go fully cashless and the changes it brought about in the economy and consumer behaviour. He also points out that it the next generation that finds it easy to adapt to change than the generation that witnesses the shift in economy and the pains that go with it. Edited excerpts from the conversation:

What was the experience of the US in adopting cashless mode of payment?

It took a long time for the US in terms of penetration and comfort to accept other modes of payments than cash. This switchover takes time. To be honest, even I generally pay cash towards everyday purchases. I use credit cards and debit cards typically only when I have to. But my children pay through credit card or through Paypal. So it's a generational issue mostly. What I am talking about is the technology and consumer behaviour. Sometimes it can take a generation or two.

How do you see the present Indian situation?

My perspective is that all these changes are very positive signs. Despite the likely slowdown after the move, India is still the bright spot. Look at the rate of growth you have. It is still in high single digits and the rest of the world is in low single digits. India is doing well. You have the youngest population and a growing population of consumers. That also helps the growth of your nation. All the companies will see that potential. These are all challenges, but are also good steps going forward. What I hear from clients is that there are conversations happening between the businesses and the government today. The government is ready to hold discussions and work together. That will help the country tide over challenges like these and the future challenges like GST.

Is there a deflationary tendency for demonetisation?

I might assume in the short-term, there may be. When these kinds of changes happen, or when there is uncertainty, consumers decide to save and wait. But in the medium to longer-term, as the policy uncertainties become clear, typically the younger generation will be all for the new economy.

E-commerce companies like Flipkart had stopped cash on delivery after the demonetisation announcement. But then they restarted it. How do you see this development?

Cash will be there because for businesses it is important that they don't lose their customers. Not everybody is a saint. The mistake here is to say that there is a tipping point when a country switches to cashless economy. Change happens in waves. The technology is being developed as we are speaking. Over time people become more comfortable to use technology. As generation evolve, they adapt. In the US, it was a 20-25 year journey. But that is not an excuse to wait to begin. It important to begin begin now. There are sizeable benefits even if it is only the cities that are adapting now. Eventually, the consumer behaviour will evolve. The true benefits of electronic payments is that you will see over time greater upticks as consumers become more educated.

Rajesh Pandathil