Has the Indians relied on cash for the past eight months of “abolition of old coins”?

Image source: Indiatimes From a global perspective, online payments are spreading at an unprecedented rate. Its strengths are flexibility, convenience, and a good user experience, while reducing the initial cost of the business.

Since the Modi government introduced “abolition of the old currency” in November last year, people have been stunned by this measure: on the one hand, it has caused the Indian economy, which relies heavily on cash transactions, to “stagnate” and affect GDP growth in the short term; On the other hand, its impetus for India's economic digitization is unprecedented.

Today, it has been eight months since the "abolition of the old currency". What directly benefits from this is the online financial companies, which have frequently made huge investments while the market has expanded dramatically.

Many companies and retailers have also embraced this wave of change, driving those who are still waiting to see.

In addition to fashion trends, Adi also rushed to pay for the trend Indian adidas advertising by cricket star Virat Kohli Adidas India version of the ad, feel it

As India's first sports brand with revenues of more than Rs. 100 crore, Adidas has opened more than 700 stores in India. Recently, Adi deployed mobile payment solution mPOS (mobile POS terminal) in 15 of its stores. Its IT director, Vishal Kapil, is very optimistic about this, because UPI payment methods will soon become popular in India, and the mPOS solution fits this new situation:

“Professional stores are the most important channel for influencing consumer brand experience. Therefore, 'experience' is very important. Use mPOS to attract and convert consumers in physical stores, get rid of the bundle of cash registers and improve the consumer experience. I see this as an entity. The first step in the digitization of store transactions."

In this payment plan, the mobile phone camera plays the role of a scanner, and customers can know the details by scanning the goods: inventory status, product price, discount, and so on. At the same time, such a payment scheme actually makes the salesperson more flexible in the entire order management and billing process.

“The mPOS solution can ban the traditional checkout counter and use the mobile phone to checkout, which will bring us more sales space. The important thing is that there is no longer a long queue in the store during the peak shopping season.” Vishal Kapil mPOS is full of confidence.

Car dealers are also beginning to embrace online payments mPOS is in India. Image from iamWire India's online financial companies are the direct beneficiaries of India's currency reform.

On June 12th, local financial technology company ftcash announced that it has launched its mPOS solution in more than 500 small and medium-sized car service centers. In these car service centers, people can already use their mobile phones to complete the payment and payment between bank accounts.

For Indian car service providers and dealers, the rent for POS devices is too expensive, and mobile-based payment solutions are exactly what they need.

Another chief product officer, Bijilipay, another company specializing in mobile payment solutions, said: "Most car service providers set up booths at trade fairs and exhibition halls to identify transactions by attracting customers to pay deposits. For these dealers, mPOS is more Low cost and easy to carry."

At the same time, auto dealers also value customers' choices in payment methods. A car shop owner near Mumbai said: "Our 90% of our customers like to pay online, which is a more economical choice. ."

Digital leap after the abolition of old coins

In fact, India's Adidas and car dealers to catch up with the digital trend is not unfounded.

Financial services technology company FIS's recent Performance Against Customer Expectations (PACE) report shows that Indian consumers have seen a dramatic increase in the use of mobile devices and other e-banking channels.

This means that the abolition of old coins at the end of last year is changing the financial habits of consumers.

More than 60% of the 1,000 Indian consumers surveyed said they started using mobile devices this year to check account balances, transaction history, pay bills, and more. In the same survey in 2016, this figure was still 39%, compared to 34% in 2015.

In addition, the findings of this report also show that although online payment is becoming more and more important for all age groups, the age of online payment users in India is still younger, mainly concentrated in the 18-36 age group. Currently, 30% of the payment is made by the mobile app during their consumption.

Young people think that the biggest drawback of traditional payment methods is that it is difficult for them to take time out to go to the bank or queue up at the bank. As Ramaswamy, Managing Director of FIS India, said: “More and more Indian consumers want to have more convenient connections with their banks, anytime, anywhere.”

The FIS report covers eight countries on five continents, including India, Australia, Brazil, Canada, Germany, Thailand, the United Kingdom and the United States, with more than 8,000 consumers. Compared with other regions, Indian respondents pay more attention to the flexibility of accessing bank accounts and payments, while paying less attention to the bank's manual services and the ability of banks to predict financial needs.

SMEs should be the key to success or failure Paytm is India's largest mobile payment and business platform, and Paytm payments have become popular on the streets of India. Image from Paytmtwitter feed

At the same time, a report from BCG (Boston Consulting) also showed that 22% of the more than 1,700 Indian consumers surveyed in the eight months since the implementation of the “abolition of old coins” in India indicated their preference. Digital payment method. Six months ago, this ratio was only 11%.

However, with the release of the new version of the banknotes, India has gradually returned to the financial model based on cash transactions. The digital economy that the government is advancing should be in the end. Who is the focus?

The reality of BCG research: At present, about 50 million SMEs are providing 20% ​​of employment opportunities for India. At the same time, they rank third in GDP. Therefore, BCG believes that if the focus is on SMEs rather than consumers, perhaps the digitization process will be more effectively promoted.

When BCG conducted in-depth interviews with more than 50 SMEs, more and more respondents indicated that they prefer cash payment. The main reasons are as follows:

SME owners are concerned about profit margins. Cash payments help them underreport their income to avoid some of the current tax and regulatory systems that are often highly complex and outdated. In addition, these companies are highly dependent on informal credit and must make cash borrowing. SME owners want to operate easily. SME owners mostly choose cash as a way to avoid vague laws, complex tax standards, and harassment by local authorities. BCG pointed out that if SMEs act in strict accordance with the current law, their cost will increase by 20%. At present, there is not enough cash-free attraction. In the survey results, 87% of the businessmen did not find any obvious benefits due to changing the payment method. Insufficient understanding. 77% of merchants are still unfamiliar with the way online payments are considered to be both complicated and inconvenient. Insufficient infrastructure. Although the government is vigorously promoting the digitization of the economy, India's infrastructure to support such large-scale transaction changes is still very limited. BCG's research found that in India, there are only two POS3 terminals per 1,000 debit cards, compared with 13 in the US and 20 in the UK. other factors. Smartphone penetration rate is still low; network speed is slow; network risk is equal. However, the report found that the current government has somewhat alleviated these problems by promoting UPI, BHIM app and Bharat QR code.

In response to these problems, BCG believes that the Indian government should implement more policies to encourage small and medium-sized enterprises to carry out digital transactions, such as introducing a three-year tax holiday for SMEs, simplifying compliance requirements, enforcing SME registration, etc., and focusing on strengthening infrastructure. Construction, raising people's awareness of the digital economy, and educating or training cyber security for SMEs to reduce their financial risks.

Although the road ahead is long, India has already started in the process of cashless economy, and many people are already on the road. But instead of reference to the cashless economy of the rider Sweden or Denmark, India is more willing to refer to China's cashless model - after all, there is much in common between China and India.

Modi believes that promoting economic digitalization is currently the most logical approach. This will increase the transparency of the Indian economy while helping the government combat tax evasion and corruption.

In short, people can no longer evade technology, the author of the new Indian news channel NewsBytes issued a message calling: "The old should give way to the new. If the Chinese manage to achieve cashless, we can."

Part of this article comes from Indiatimes, NewsBytes, and more.

Author | Gebu