by Vishal Maru
One uncontested outcome of the otherwise debatable move of demonetisation is that it normalized digital payments in most parts of India. It changed people’s attitudes towards it in a country where people were largely accustomed to cash. Even though cash is back in the economy, digital payments continue to be in regular use.
Today the customer can choose from a plethora of payment options besides the ‘traditional’ credit/debit cards and net banking. There are PPIs/wallets, UPI, BharatQR, NFC cards and biometric payments that are also on the menu. The user is also at liberty to construct a method in this madness, choosing different payment options according to need and convenience.
There are many advantages of going digital, some apparent, some not so much.
Consumers enjoy the benefits of having multiple options and convenience
- Transaction now happen at the blink of an eye. Or should I say, at the scan of a QR code. Coupled with secured and well-placed risk management guidelines, it is an example of modern-day convenience.
- You don’t find often find yourself sifting through bundles of cash or squabbling over loose change anymore, do you?
- Personal budgeting and tracking expenses is easier than ever: cash payments can be harder to remember, especially in a scenario where payment receipts cannot really be expected – like at the kirana shop or a push-cart vendor.
- A wide variety of payment options exist today. They can chosen from based on convenience, safety, cost, and speed.
- Promotions, discounts, and other offers from these payment options enhance the consumer’s buying experience and reduce transaction cost.
Merchants use digital payments to better the customer experience
- Lower cost of transaction. Today, a merchant is not charged for debit card transactions of up to Rs. 2000 (i.e. 80% of POS transactions today) and even for those above Rs. 2000, the government has mandated the Merchant Discount Rate (MDR).
- Asset options. Merchants can choose between assets like PoS and mPOS devices or asset-light options like Bharat QR and UPI that do not require additional investments.
- No hassles of cash management. The merchant is rid of cash handling, human errors in tallying and depositing cash, pilferage, lack of change etc.
- Value-added services. Services like soft PoS, EMI, Loyalty, Dynamic Currency Conversion (DCC), etc allow merchant to offer better payments experience to the consumers, which helps influence the buying decision of the consumers.
Digital payments will help reduce costs on the economy
Cash as a payment option is intrinsically expensive, though its costs are hidden. Every year, the government spends crores on minting and circulating cash, also incurring costs on ensuring its physical security. These expenses will reduce drastically with the increased usage of digital modes. There is a massive merchant ecosystem in India, estimated at 40 million that has not used e-payments. Along with the imminent growth of payments, one cannot ignore the importance of security measures. India has proactively taken many steps to reduce the chances of payment frauds:
- Two-factor authentication – this validates a transaction with two things i.e. what you have (card, account number etc.) and what you know (OTP, PIN, VBV number, 3D secure PIN etc.). That is why one is easily defrauded when he shares his PIN/OTP.
- Chip-based cards – magnetic stripe cards can easily be cloned from an ATM or POS machine through a skimmer. The newer chip-based cards encrypt card information that cannot be decoded by skimmers, making it difficult for fraudsters.
- Card control apps – some apps allow a customer to load his card details and set controls on its usage i.e. channels of usage, international use, transaction limits etc.
The future of Cashless India looks pretty promising as the response from people towards digitization has been encouraging. Digital transactions will improve transparency in the economy and in turn, the credibility of the country.
Vishal Maru heads the Merchant Services, Digital Payments and Loyalty Business division of Worldline South Asia and Middle East.
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