Bengaluru, 7 November: A significant new study has found that 63% of retailers in the countryside may now be inclined to use the cashless system of payment. The study reports a marked jump in the number of rural consumers willing to use mobile payments, post demonetisation, on par with their urban counterparts. In locations with moderate consumption levels, there is also a significant increase in shops that are prepared to pay a transaction charge in excess of 1%.
Titled 'Going Cashless?', the research report covering perceptions, usage and behavior, toward digital payments, pre and post demonetisation, was conducted by the Centre for Digital Financial Inclusion at the Institute for Financial Management & Research (IFMR) in collaboration with researchers at Digital Innovation Lab, IIM Bangalore. The report was released at the IIMB campus at an event in Bangalore today, a year after demonetisation.
Prof. G. Raghuram, Director, IIM Bangalore, described the research report as a useful and timely one. “The focus areas now should be on the challenges, such as awareness creation and literacy. The other areas needing attention are issues surrounding infrastructure and connectivity. I hope all this has policy implications,” he said.
“There is a huge untapped potential for mobile payments at unorganized kirana stores, where most Indians go to fulfil their daily needs,” said Krishnan Dharmarajan, Executive Director, CDFI. “A huge chunk of 94% of shopkeepers have mobile phones, of which 41% were smartphones at the time of the March 2017 study. 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.”
Prof. D Krishna Sundar, Chairperson, Digital Innovation Lab, IIMB, said: “In order to reach 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 economic activity and the current cash-based economy is the unorganized retail sector, this is a segment which cannot be ignored in the cashless journey and our study highlights that there are promising opportunities.”
The 'Going Cashless' report is a spin-off of an ongoing academic study conducted by CDFI, Institute of Financial Management and Research, and the Digital Innovation Lab, IIMB on the various factors shaping usage of cash and digital payments amongst consumers and kirana retailers. This study also highlights the key challenges and opportunities to create an inclusive enabling environment for digital transactions across the country.
A short film, detailing the making of the report, was aired after the launch. Rupesh Kumar, Head – Digital Payments, ICICI, provided a banker’s perspective, and G S Sastry, Partner, PwC, gave an overview of the impact of digitization on Indian supply chain. Dr. Shashank Garg, Principal Architect, DI Lab, IIMB, delivered the vote of thanks.
Key highlights from the report
Going Cashless: Perceptions, usage and behaviour towards digital payments in India, pre and post demonetization
- More retailers intend to use cashless systems
- Post-demonetization, 63% of the retailers intend to use cashless systems. A significant increase in the number of retailers intending to use cashless system in locations with moderate consumption levels. Consumers push and interest in cashless system, peer pressure and perceived value of cashless transactions such as convenience etc. driving this change
- 45% retailers intend to deploy a POS machine. Current penetration (about 5% Kirana retailers having a POS device) and at least 35% of consumers having access to Cards present a huge opportunity
- Huge untapped potential for Mobile Payments
- 94% of Kirana retailers have a Mobile Phone of which 41% have Smartphones. Around 80% of Smartphone users use Internet. This presents huge opportunity to move these retailers to Mobile Payments
- The influx of low cost Smartphones and VoLTE phones along with bundling of Internet further could create huge potential for proliferating Mobile Payments
- More Retailers willing to pay a higher transaction charge
- Almost 38% of the retailers are willing to pay a transaction charge in excess of 1%. Post demonetization, there has been a significant rise in the number of retailers willing to pay a transaction charge in excess of 1% in locations with moderate consumption levels.
- Fewer consumers “Always” using Cash; More are planning to use Cashless modes
- About 76% of the consumers still “Always” prefer to use cash, but this number seems to be reducing. In locations with moderate consumption levels, around 10% fewer consumers reported “always” using cash.
- Higher number of consumers are planning to use a cashless mode frequently in future. Although more consumers plan to use Cards frequently than Mobile Payments the gap is narrowing.
- Rural consumers equally enthusiastic about cashless Payments
- 63% of retailers in rural areas plan to use a cashless system. High penetration of bank accounts and mobile phones amongst both consumers (80% and 84% respectively) and retailers (97% and 94% respectively) and an inclination amongst consumers to use cashless modes should be tapped.
- Huge opportunity to bundle other financial products and services, commerce with digital payments to drive adoption
- Young consumers (up to 30years of age) key to drive cashless payments
- Young consumers have high access to cashless instruments (68% of those having a bank account have access to cashless instruments), Smartphones (52% of those having a mobile phone have Smartphone), use Internet (81% of those having Smartphones) and are displaying a higher inclination to adopt cashless payments
- Young consumers could not only the first adopters but could also help the older generation to learn and adopt cashless payments.
The 'Going Cashless' study was done in two stages – pre-demonetisation (September 2016) and post-demonetisation (Feb-March 2017) with the sample of consumers and retailers from 11 districts across India.
ABOUT CDFI
Centre for Digital Financial Inclusion (CDFI) at the Institute for Financial Management and Research, focuses on research and innovation to open doors for the poor to the financial mainstream. To make this happen, the Centre has developed innovative solutions to improve design and drive faster rollout of large benefit programs. Amongst its various projects, the Centre is piloting a digital solution for Anganwadis. The Centre is also piloting an integrated cashless digital platform for Farmer Producer Organizations (FPOs). The Centre has also supported mobile based continuous literacy tools for deepening digital, financial and domain literacy.
For more information, please see: http://www.cdfi.in/
About Digital Innovation Lab at IIMB
The Digital Innovation Lab (DI Lab) is an advanced hub for research and innovation at Indian Institute of Management Bangalore (IIMB). As a joint collaboration of CDFI and IIMB, it works in the areas of financial inclusion, public health and education. The philosophy of the lab is to use innovation in technology-enabled products and services to facilitate inclusion at the base of the pyramid in the digital age.
Indian Institute of Management Bangalore is a leading research-focused business school in Asia. For more information, please visit: www.iimb.ac.in
Bengaluru, 7 November: A significant new study has found that 63% of retailers in the countryside may now be inclined to use the cashless system of payment. The study reports a marked jump in the number of rural consumers willing to use mobile payments, post demonetisation, on par with their urban counterparts. In locations with moderate consumption levels, there is also a significant increase in shops that are prepared to pay a transaction charge in excess of 1%.
Titled 'Going Cashless?', the research report covering perceptions, usage and behavior, toward digital payments, pre and post demonetisation, was conducted by the Centre for Digital Financial Inclusion at the Institute for Financial Management & Research (IFMR) in collaboration with researchers at Digital Innovation Lab, IIM Bangalore. The report was released at the IIMB campus at an event in Bangalore today, a year after demonetisation.
Prof. G. Raghuram, Director, IIM Bangalore, described the research report as a useful and timely one. “The focus areas now should be on the challenges, such as awareness creation and literacy. The other areas needing attention are issues surrounding infrastructure and connectivity. I hope all this has policy implications,” he said.
“There is a huge untapped potential for mobile payments at unorganized kirana stores, where most Indians go to fulfil their daily needs,” said Krishnan Dharmarajan, Executive Director, CDFI. “A huge chunk of 94% of shopkeepers have mobile phones, of which 41% were smartphones at the time of the March 2017 study. 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.”
Prof. D Krishna Sundar, Chairperson, Digital Innovation Lab, IIMB, said: “In order to reach 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 economic activity and the current cash-based economy is the unorganized retail sector, this is a segment which cannot be ignored in the cashless journey and our study highlights that there are promising opportunities.”
The 'Going Cashless' report is a spin-off of an ongoing academic study conducted by CDFI, Institute of Financial Management and Research, and the Digital Innovation Lab, IIMB on the various factors shaping usage of cash and digital payments amongst consumers and kirana retailers. This study also highlights the key challenges and opportunities to create an inclusive enabling environment for digital transactions across the country.
A short film, detailing the making of the report, was aired after the launch. Rupesh Kumar, Head – Digital Payments, ICICI, provided a banker’s perspective, and G S Sastry, Partner, PwC, gave an overview of the impact of digitization on Indian supply chain. Dr. Shashank Garg, Principal Architect, DI Lab, IIMB, delivered the vote of thanks.
Key highlights from the report
Going Cashless: Perceptions, usage and behaviour towards digital payments in India, pre and post demonetization
- More retailers intend to use cashless systems
- Post-demonetization, 63% of the retailers intend to use cashless systems. A significant increase in the number of retailers intending to use cashless system in locations with moderate consumption levels. Consumers push and interest in cashless system, peer pressure and perceived value of cashless transactions such as convenience etc. driving this change
- 45% retailers intend to deploy a POS machine. Current penetration (about 5% Kirana retailers having a POS device) and at least 35% of consumers having access to Cards present a huge opportunity
- Huge untapped potential for Mobile Payments
- 94% of Kirana retailers have a Mobile Phone of which 41% have Smartphones. Around 80% of Smartphone users use Internet. This presents huge opportunity to move these retailers to Mobile Payments
- The influx of low cost Smartphones and VoLTE phones along with bundling of Internet further could create huge potential for proliferating Mobile Payments
- More Retailers willing to pay a higher transaction charge
- Almost 38% of the retailers are willing to pay a transaction charge in excess of 1%. Post demonetization, there has been a significant rise in the number of retailers willing to pay a transaction charge in excess of 1% in locations with moderate consumption levels.
- Fewer consumers “Always” using Cash; More are planning to use Cashless modes
- About 76% of the consumers still “Always” prefer to use cash, but this number seems to be reducing. In locations with moderate consumption levels, around 10% fewer consumers reported “always” using cash.
- Higher number of consumers are planning to use a cashless mode frequently in future. Although more consumers plan to use Cards frequently than Mobile Payments the gap is narrowing.
- Rural consumers equally enthusiastic about cashless Payments
- 63% of retailers in rural areas plan to use a cashless system. High penetration of bank accounts and mobile phones amongst both consumers (80% and 84% respectively) and retailers (97% and 94% respectively) and an inclination amongst consumers to use cashless modes should be tapped.
- Huge opportunity to bundle other financial products and services, commerce with digital payments to drive adoption
- Young consumers (up to 30years of age) key to drive cashless payments
- Young consumers have high access to cashless instruments (68% of those having a bank account have access to cashless instruments), Smartphones (52% of those having a mobile phone have Smartphone), use Internet (81% of those having Smartphones) and are displaying a higher inclination to adopt cashless payments
- Young consumers could not only the first adopters but could also help the older generation to learn and adopt cashless payments.
The 'Going Cashless' study was done in two stages – pre-demonetisation (September 2016) and post-demonetisation (Feb-March 2017) with the sample of consumers and retailers from 11 districts across India.
ABOUT CDFI
Centre for Digital Financial Inclusion (CDFI) at the Institute for Financial Management and Research, focuses on research and innovation to open doors for the poor to the financial mainstream. To make this happen, the Centre has developed innovative solutions to improve design and drive faster rollout of large benefit programs. Amongst its various projects, the Centre is piloting a digital solution for Anganwadis. The Centre is also piloting an integrated cashless digital platform for Farmer Producer Organizations (FPOs). The Centre has also supported mobile based continuous literacy tools for deepening digital, financial and domain literacy.
For more information, please see: http://www.cdfi.in/
About Digital Innovation Lab at IIMB
The Digital Innovation Lab (DI Lab) is an advanced hub for research and innovation at Indian Institute of Management Bangalore (IIMB). As a joint collaboration of CDFI and IIMB, it works in the areas of financial inclusion, public health and education. The philosophy of the lab is to use innovation in technology-enabled products and services to facilitate inclusion at the base of the pyramid in the digital age.
Indian Institute of Management Bangalore is a leading research-focused business school in Asia. For more information, please visit: www.iimb.ac.in