All posts in the Cashless category


Published December 30, 2016 by vishalvkale

The newest mantra for the nation is this simple, soft and quiet little word – Cashless, that carries within itself a world of potent meaning, deep change, hopes, opportunities and stress… everywhere you turn around, you can see people on social media avowing it as the next great thing… while the naysayers are quick  to point out a series of objections and hindrances to this great new plan.
My take – both are right, both sides are spot-on; that said, there is a decided need to take a reality check for both sides. The nay-sayers first : they need to accept that digital payments are indeed getting to be the norm. You only have to visit the nearest multiplex window to see how many seats get booked through mobiles and other online methods to gauge the change that is sweeping the land. The need of the hour is to avoid making this is a matter of political affiliation, and view it as a sweeping change – one that is a logical extension to the inroads of the Smartphone and the Internet, as I pointed out in an earlier article nearly 18 months ago.
The current environment is strangely veering towards political aspects – which have only a defined and limited role in matters of economics. Be it social media or news articles, at least I have not come across an apolitical analysis, which is of course admittedly hard to pull off, given the important role political will and direction have in the realm of economics. But this is a vitally needed exercise, so that the bare facts and current status of the reality can be understood.
The advantages have been highlighted ad-nauseum on social media as well as news articles; I would rather not go down that road. In point of fact, the reality is that Digital modes of payment were always on the upswing in India {Let us, for a moment, forget the Urban-Rural argument. I will get to it in a minute}. Fact also is that this has got a major upswing and increase in momentum due to recent events. It is a further fact that internet usage as well as smartphone penetration is increasing at a rapid clip – these are all facts, and virtually beyond debate, almost.
The fact is that digital is here to stay; the inroads it has made into various industries, and the disruptive power of this new medium {subject of an upcoming analysis on my blog} – is bound to cause upheavals, change, stress, losses as well as profits. That is the way with disruptive technologies – they radically alter the playing field, making the new approach, new strategy, new tactics and a new mindset a virtual necessity. All it requires is to add two words to the naysayers argument : “for now”. All they state is mostly accurate – for now. This is what we examine in the next part below
The other side would do well to drop the rhetoric and get connected with reality. The reason is straightforward – no amount of rhetoric can overcome the very real problems, objections and hindrances that lie along the path to increasing cashless mechanisms. A current exponential growth rate of smartphones, data and internet does nothing to remove those problems – neither does it guarantee cashlessness, nor does it mean continued exponential growth. That is simple truth.
The first and foremost thing that needs to be understood and accepted is that going cashless is not and will never be a matter of economics or technology primarily. These are the enablers to this; the real starting point is the simple reality of consumer acceptance. You may have the greatest product on the planet – it is not going to sell unless the consumers want to use it, period. This is one of the first lessons of marketing, to be honest. You have to understand the consumer – not the mere presence of the tool or the solution which you perceive can make consumer life simpler
What makes the consumer life simpler is a matter of individual choice and priorities, determined by good old values, belief systems, demographic details etc – good old simple old-fashioned marketing at its best. And from that perspective, what screams out loud from the entire market is one reality – the penetration of online wallets, mobile payments, internet payments has not kept pace with the penetration of smartphones and the internet; and even the desktop & laptop. It is increasing – yes; but it is a fraction.
What this tells us is that there are major obstacles to large-scale consumer acceptance that have by-and-large nothing to do with the technology concerned. Has anything changed to alter that? I cant see anything. Let us for a moment assume that 100% India goes cashless in the cash crunch. Given the base problems of consumer acceptance – the online transactions would then recede the moment cash become available, given the customer does not accept it as a feasible long-term solution. Now neither of the above will happen – 100% India wont go cashless, and the ludicrous scenario of a reduction in cashless transactions will also not come about.
A lot has been said of the physical issues – lack of smartphone penetration in especially rural India; connectivity issues; lack of POS terminals; Per capita income; hinterland issues et al; perhaps far too much. My humble submission to all is that these are standard realities for a developing economy, and only to be expected. What is more important is the lack of acceptance and consumer education in the set of consumers who can be called to be the innovators, the ones who drive the consumption
I am referring to educated people who still why away from using the new technology. The reasons that emerge from understanding these people is what will drive growth and consumption of cashless services in India. These can be fear of loss, lack of a proper legal framework [whether real or perceived} – these can be overcome. But that wont happen overnight, and wont happen with rhetoric. It requires consumer research not just by the State, but also by the companies operating in that sphere, who now need to identify consumer demographic groups consumption patterns of digital payment and craft strategies to increase consumption. This is something that will take time, so let us give it the time it needs. We don’t need or want rhetoric in such a nascent industry…