63% rural retailers intend to go cashless

63% rural retailers intend to go cashless

63% rural retailers intend to go cashless

With an increase in the penetration of mobile phones and internet connectivity, coupled with demonetisation, a whopping 63% of rural retailers intend to go cashless in future.

"This is on par with urban retailers (62%)," said Krishnan Dharmarajan, Executive Director of Centre for Digital Financial Inclusion (CDFI).

CDFI at the Institute for Financial Management and Research, in collaboration with researchers at Digital Innovation Lab, IIM Bangalore, has released a report 'Going Cashless?', covering perceptions, usage and behaviour toward digital payments in India: pre and post demonetisation, and the study reports that in rural areas, people are willing to use mobile payments and their perceptions have changed as much as in urban areas.

There are more than 1.2 crore unorganised retail stores in India, and 94% of the consumers fulfill their daily needs from the unorganised kirana stores. "There is a huge opportunity in the rural sector which is untapped. Only 9% of small retailers have access to loans, which means there is a growing opportunity to build financial products catering to this segment alone," said Dharmarajan.

According to the report, pre-demonetisation, almost 91% of the consumers in locations with moderate consumption levels were always using cash. Post-demonetisation, a significant reduction was observed in the number of consumers who always used cash as the medium to pay for the supplies. Post-demonetisation, only 80% of the consumers in these locations always used cash.

More card holding consumers in locations with sizeable consumption used cards compared to locations with moderate consumption. Overall, 16% of the consumers who had smartphones used mobile phones for making payments in the period post-demonetisation.

Also, the use of mobile phone for payments was significantly higher amongst consumers in urban areas (23%) than rural areas (11%) and in locations with sizeable consumption (27%) than in locations with moderate consumption (10%).

Shashank Garg, Principal Architect- Digital Innovation Lab, IIM Bangalore, said the study was done in two stages- pre and post demonetisation. "We also found that the youth is encouraging older generation to use smart phones and make payments. Post-demonetisation, 51% of the young consumers perceived mobile payment services to be useful and planned to use them more frequently," he said.

The study also points out the need to create awareness on the benefits of digital payments and allay concerns on digital payments. It adds that increased usage of financial products and services can increase adoption of digital payments.

Dharmarajan added that they are planning to revisit and conduct the study quite often to understand more about the ecosystem that is moving towards cashless.