By Vishal Kale
The newest mantra for the nation is this simple, soft and quiet little word – cashless. It carries within itself a world of potent meaning, deep change, hopes, opportunities and stress. Wherever you turn, you can see people on social media avowing it as the next great thing. Of course, this is only one side of the coin. Naysayers have been quick to point out a series of objections and hindrances.
Criticism from all around
I believe that both sides are spot-on. But, let’s examine their claims. If we look at the naysayers, they need to accept that digital payments are indeed getting to be the norm. Despite their criticism, you only need to visit the nearest multiplex window to see how many seats get booked through mobiles. This will help you to gauge the change that is sweeping the land. The need of the hour is to avoid making this a matter of political affiliation.
Nonetheless, the current environment is veering towards politics, which has only a defined and limited role in matters of economics. Be it social media or news articles, it is hard to find any sign of apolitical analysis, which is admittedly hard to pull off, given the important role that this step will have in shaping our future. But, they should remember the vital nature of this exercise and show caution before leaning too heavily on the government.
Digital was always on the rise
The advantages have been highlighted ad-nauseum on social media as well as news articles; I would rather not go down that road. The fact is that digital modes of payment were always on the upswing in India. 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.
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, is bound to cause upheaval and change. That is the way with disruptive technologies – they radically alter the playing field, making a new approach 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 but only for now.
The cashless brigade
The other side would do well to drop its rhetoric and get connected with reality. The reason is straightforward – no amount of rhetoric can overcome the very real problems, that lie along the path to increasing cashless mechanisms.
The first thing that needs to be understood and accepted is that going cashless is not, and will never be, a matter of economics or technology.
You may have the greatest product on the planet but, it is not going to sell unless the consumers want to use it.
This is one of the first lessons of marketing – you have to understand the consumer. The mere presence of the tool or the solution that you believe will make consumer life simpler is not enough.
What makes the consumer’s life simpler is a matter of individual choice and priorities, determined by good old values, belief systems, demographic details and so on – 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 and internet payments have not kept pace with the penetration of smartphones and the internet. It is increasing yes, but it is a fraction.
This tells us that there are major obstacles to large-scale consumer acceptance that do not have much to do with the technology concerned. I do not believe that anything has altered that situation. Let us for a moment assume that everyone in India, goes cashless. Given the base problems of consumer acceptance – online transactions would recede the moment cash becomes available, since the customer does not accept it as a feasible long-term solution. However, neither of the above will happen.
The need for consumer awareness
A lot has already been said regarding infrastructural obstacles – the lack of smartphone penetration especially in rural India, connectivity issues, the lack of POS terminals, per capita income, hinterland issues and so on. My humble submission is that these are standard realities in any developing economy, which are only to be expected. What is more important is the lack of acceptance and consumer education in that section of the populace that can be called the innovators – the ones with the power to drive consumption.
I am referring to educated people who still shy away from using new technology. Possible reasons for their hesitation could be the fear of loss and the lack of a proper legal framework (whether real or perceived). These hesitations can be overcome. But it will not happen overnight and it will not happen using rhetoric. It requires consumer research not just by the State, but also by the companies operating in that sphere. These companies 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.