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Cashless system fails to find place in retail space
Independent India, after suffering from the country’s biggest monetary decision to scrap currency notes of Rs500 and Rs1,000 denomination, is still yet to embrace cashless system and the government’s target is far away from the existing scenario.
Hyderabad: Independent India, after suffering from the country’s biggest monetary decision to scrap currency notes of Rs500 and Rs1,000 denomination, is still yet to embrace cashless system and the government’s target is far away from the existing scenario.
Life insurance and retail segments were the worst hit due to demonetisation announced on November 8, 2016. Indians, urban and rural alike, are willing to use smart phones for digital transactions, but the attitude of cashless system is yet to sink in the minds of consumers.
A latest study by Centre for Digital Financial Inclusion (CDFI) has found that 63 per cent of retailers in the countryside may now be inclined to use the cashless system of payment.
Krishnan Dharmarajan, Executive Director, CDFI, said: “There is a huge untapped potential for mobile payments at unorganized kirana stores, where most Indians go to fulfil their daily needs. About 94 per cent of shopkeepers have mobile phones, of which 41 per cent were smartphones at the time of the March 2017 study.”
Prof D Krishna Sundar, Chairperson, Digital Innovation Lab, IIMB, said: “Since one of the main contributors to economic activity and the current cash-based economy is the unorganized retail sector, this is a segment which can’t be ignored in the cashless journey and our study highlights that there are promising opportunities.”
Coming to life insurance premiums, this segment was worst hit during the first half of post-demonetisation period as premium payments were affected in more negative way. Karni Singh Arha, Chief Financial Officer, Aviva Life Insurance, said: “Life insurance premiums are sourced in three ways-- cash, cheque and online payment.
Of course, soon after demonetization the industry witnessed a sharp spike in cash payment of premiums, but over time we have seen even households from tier-2 cities that preferred cash getting comfortable with NEFT and ECS mandate.
This huge behaviour change has significantly improved mindset towards digital payments and will reduce unclaimed funds.” As per the RBI data, the value of debit and credit cards at Point of Sales (PoS) as well as ATMs were Rs26.22 lakh crore in the November 2016 to August 2017 period.
This is less than two per cent as compared to the similar value in the 10 months between November 2015-August 2016. There is, however, a 16 per cent jump in the volume of transaction. The volume of transaction for both debt and credit card at POS and ATM went up from 9,132 million to 10, 612 million.
By Sreenivasa Rao Dasari
