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Digital payment channels are altering the ‘payment rituals’ of consumers

In today’s times, demands for quicker, hassle-free and seamless payment methods are rising.

December 30, 2019 / 07:01 PM IST

Pranay Jhaveri

We’ve undoubtedly seen the adoption and demand of UPI and other Fintech innovations making banking and payments very experiential for both consumers and businesses. In today’s times, demands for quicker, hassle-free and seamless payment methods are rising from all generations, primarily from millennials and the Gen Z.

India’s digital ecosystem empowers us to be one click away from ordering the best food, necessary groceries or medicines available in and around our areas on apps and get apparels shipped over distances to our doorsteps.

Imagine how an average Indian spends his weekend--after finishing dinner at a restaurant, he takes out his smartphone and uses his QR code enabled UPI app to pay the bill. He calls for a cab to go home on his smartphone, all of which have been prepaid using his mobile wallet or bank account linked to his cab-booking app. While on his way, he recharges his father’s mobile balance, pays his electricity bill, and orders his mother’s medicines online at a delivery time scheduled for the next morning.

He makes all of these payments directly from his bank account using his UPI app. More than five payment transactions done in less than half an hour, and no cash was exchanged. UPI truly has the potential to offer much more than it is already catering to. The payment mode can lead the way with much more customized features that can help increase financial inclusion all over India. With the government GST incentives and MDR cuts, we can expect an increased and sustained merchant acceptance in India.

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India has managed to rise up to the 28th position in the global ranking of adoption of e-payments by government (Source: ‘The 2018 Government E-Payments Adoption Ranking’ by The Economist Intelligence Unit) or is forecasted to have the fastest growth in digital payments transaction value between 2019 and 2023, with a CAGR (compounded annual growth rate) of 20.2 percent, ahead of China and the United States. (Source: KPMG Report)

We’re on a path of progress with India hitting the 500 million plus mark of internet users with 200 million active users being from rural India. Nevertheless, we have a long way to go before we complteley democratize the adoption of technology.

Customers, mentioned in the above example, are a part of a particular subset. Outside of this set, many people despite having the required infrastructure for digital payments, are still reluctant in accepting digital modes because of many reasons like lack of trust, low transparency, high probability of security breaches, or just because they’re much more comfortable with the traditional ways of financial transactions.

As per a KPMG report titled Fintech in India-Powering mobile payments - "From close to 1.5 million digital payment acceptance locations in 2016-17, the number of merchants accepting digital payments modes has increased to over 10 million, in a short span of two to three years.” By virtue of this rise in merchant adoption of digital payments, there was an impetus to the ease of digital payment adoption at a macro level.

Despite security and data privacy being primary concerns, the overwhelming interest to enable digitization in every sphere of business, education, communication and lifestyle cannot be curbed. With advanced implementation of failsafe methods of user authentication such as biometric authentication and improvement in security protocols by the National Payments Corporation of India (NPCI) has paved the way for a truly digital economy.

The author is Chief Business Officer, Euronet Services India
Moneycontrol News
first published: Dec 30, 2019 07:01 pm

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