Chhotu here accepts digital currency payments via the mobile platform on a daily basis.
His QR code is prominently displayed upfront next to the bottles of sauce, and a sticker displays the icons of all the payment apps acceptable to his Bhim app.
The Bhim system, launched by the Government of India, is a godsend to micro businesses like Chhotu’s – it allows him to accept payments from a wide ranging variety of apps and systems with the use of just one QR code.
Mr. AutoRickshaWallah on the other hand, preferred to negotiate with me in cash, agreeing to an amount upfront, based on my destination than to go through the hassle of using his digital meter.
By law, he must accept digital payments, if asked by a customer. But, he says, this is very rare; he might accept a Paytm fare once a week. The balance is all in cash.
One size does not fit all
The need for cash in hand during the course of each of these service providers drives their payment acceptance behaviour. Chhotu may not need as much cash on hand once he has set up his inventory and supplies for the day, barring the need for change whereupon he can suggest the customer move to a digital option if required. Plus, at the end of his shift at 10pm he’s happier if the bulk of his sales is in digital form for safety and security.
Mr Autorickshawallah, on the other hand, feels the need for cash available to purchase fuel, food, and pay out wherever required for parking or other purposes (like the police!). He’s on the move and the signal may or may not work when the time comes for him to accept payment.
Digital adoption is unevenly distributed
Their customers are also from different demographics. Where Chhotu is set up, the market is full of young people with disposable income, out for the evening with their friends. Hearsay has it that mobile apps are selected and used based on their marketing incentives – most offer cashback on digital payments as a driver for user acquisition, but users have gotten clever and download them all so that they can take advantage of different promotions and offers to maximize their benefits.
Mr Autorickshawallah’s customers come from a wider range of demographics, and not as likely to be as comfortable juggling digital payments as Chhotu’s youthful crowd. He’s in his vehicle and on the move, and must ensure the payment gets made, unlike Chhotu who can take the risk of waiting since he and his stall aren’t going anywhere.
Is Cashless in India’s Future?
While digital payments, cards, and mobile apps were certainly far more visible than ever before, and definitely since the demonetization of two years ago, there is a very long way to go before cashless becomes as broadly accepted and mainstream as mPesa in Kenya. Unlike mPesa, the Indian digital currency ecosystem is linked intimately to bank accounts, and thus, there’s an entire ecosystem of services and goods providers that needs to shift over to the formal economy and its financial institutions before cashless becomes seamless at the borderlands of economic strata and demographics.
The current formal financial ecosystem is not designed to address the needs of the informal and unorganized sectors. And this is the iron that post demonetization analysis shows was not struck while it was hot enough to enable the broader change in culture and behaviour to stick once currency was back in circulation.