Rohit Kumar
Have you ever visited any remote village with limited to no internet access? While you may have experienced this only a few times, gaps in internet connectivity remains a concern for a majority of India’s population. In fact, poor infrastructure coupled with digital illiteracy is the primary reason behind the slow adoption of digital payments in rural areas.
According to ET statistics, only 20.26% of rural and 64.84% of the urban Indian population have direct access to the internet, thus rendering the rest untapped. Despite the evolution of digital payments in India, the rural-urban divide continues to exist. Even today, unbanked pockets of the country rely heavily on cash, making it the most ubiquitous payment method. An obvious query that follows then – How can we address this discrepancy and pave the way for large-scale adoption of digital methods of bill payment? This is where FinTech comes into play.
Digital inclusion
The digital payment landscape in India has grown up and grown out and is steadily moving forward from its nascent stage. There are prominent changes in the technologies related to the bill payment sector and financial transaction, with pervasive mobile apps and websites gaining more ground. However, most of the Fintech giants tend to overlook the underserved segments of the population, only concentrating on the urban quantum. Against this backdrop, the need of the hour is a solution that offers both the convenience of technology and the ease of use of cash.
Mobile vans comprising mini ATMs and bill payment kiosks can be a low-cost yet secure way to bring the benefits of digital banking to the remotest corners of India while eliminating the need for high internet connectivity or any particular hardware. This, if implemented across the country, can be a boon for the underserved segments of the population. Let’s see how it works. The bill payment kiosk accepts cash as a bill payment mode and makes the transaction digital, in addition to accepting credit/debit card payments. The mini ATMs, on the other hand, enables users to withdraw cash without having to visit the bank’s physical branch. Moreover, this entire process takes place in real-time, thus ensuring security.
While one may wonder about its viability, new-age FinTech players are leveraging their technical expertise and partnering with major banks to further this model in India. It is, therefore, a win-win situation for both the involved parties – rural dwellers can have easy access to banking facilities and other financial services, whereas banks can expand their reach to the hinterlands of India.
The road ahead: The future of digital payments in India
Home to over half a billion internet subscribers, India has fast emerged as a prominent digital economy. With the increased availability of budget smartphones and cheaper data plans, the nation is leading the digitalization race, trailing only China. Government-led initiatives such as ‘Digital India’ have also played a pivotal role in the growing acceptance of internet-based services among the masses. Although the progress has been rather slow so far, the country is likely to experience a faster, large-scale adoption of digital payments in the coming years. Non-cash transactions are growing at CAGR of 12.7 per cent, states a recent report by KPMG. The report, titled "Fintech in India - Powering mobile payments", further reveals that the number of merchants accepting digital payment modes in India has gone up from just 1.5 million in 2016-17 to over 10 million in just a couple of years. The numbers speak for themselves – more and more Indians are taking to the digital modes for any financial transaction, be it bill payment or purchasing products. Among other factors, it is the concerted effort of FinTech companies that is driving this shift.
The author Is CEO & Co-Founder of Xpay.Life Pvt Ltd.
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