One year of demonetisation: Kirana stores, consumers take cashless route

A study found that young consumers (up to 30 years of age) were key to drive cashless payments
After demonetisation, there has been a significant decrease in the frequency of cash use by consumers along with palpable change in kirana retailers’ reliance on cash, finds a research, tracking perceptions, usage and behaviour of people towards digital payments in the pre and post demonetisation periods.  

More than 63 per cent retailers said they intend to migrate to cashless systems, with 45 per cent willing to deploy a POS machine in the near future. Interestingly, the study found that retailers are willing to pay a higher transaction charge. About 59 per cent of the retailers were willing to pay a transaction charge of less than 1 per cent, whereas about 38 per cent were willing to pay 1 per cent or more. 

The study “Going Cashless” was done in two stages–pre-demonetisation (September 2016) and post-demonetisation (Feb-March 2017), with the sample size of 2,600 respondents, that included consumers and retailers from 11 districts spread across 10 states. It was conducted by the Centre for Digital Financial Inclusion (CDFI), in collaboration with researchers at Digital Innovation Lab, IIM-Bangalore.

While looking at consumer behaviour in the post demonetisation period, the research found that rural consumers were equally enthusiastic about cashless payments. Accordingly, 63 per cent of retailers in rural areas plan to use a cashless system, the study said. 

There is need to tap the opportunity provided by high penetration of bank accounts and mobile phones amongst consumers (80 per cent and 84 per cent respectively) and retailers (97 per cent and 94 per cent respectively) and an inclination amongst consumers to use cashless modes, noted Krishnan Dharmarajan, executive director, CDFI.  “There is a huge opportunity to bundle other financial products and services, commerce with digital payments to drive adoption,” he added.

The study found that young consumers (up to 30 years of age) were key to drive cashless payments.  “Young consumers have high access to cashless instruments (68 per cent of those having a bank account have access to cashless instruments), smartphones (52 per cent of those having a mobile phone have smartphone), use internet (81 per cent of those having smartphones) and are displaying a higher inclination to adopt cashless payments,” the study said.

Commenting on the fears of digital payments, for consumers among the key concerns were losing of PINs and its misuse (50 per cent), and making mistakes while paying or tapping out bill wrongly (47 per cent).

Retailers were afraid of tax implications (46 per cent), sharing their information with others (46 per cent) and customers making a mistake in entering the right information (44 per cent), the study found.