Digital on-boarding key to retail growth, says Pine Labs' Kush Mehra

As much as 90 per cent of the country’s $700-billion retail sector is unorganised, and made up mostly of neighbourhood kirana stores, among other small shops. These businesses play a pivotal role in the socio-economic development by accelerating industrialisation and commercialisation in the rural and economically-underserved pockets of the country. But these kirana stores are yet to make the most of the digital transformation happening in organised retail. 

Small retail stores are facing  business challenges owing to the fast-growing e-commerce sector, evolving customer preferences and the rise of digital. Moreover, over the last few years, merchants across the country have faced several other impediments to growth such as cumbersome paperwork around taxation and billing, low infrastructure support and rising international competition. I believe that these challenges are actually good opportunities for growth, provided the merchants are willing to jump onto the digital bandwagon. 

Incentivising them to go digital, like the recent move to reduce the merchant discount rate, will allow them to cut costs and maintain a steady record of transactions. In turn, this will improve their creditworthiness and provide access to new financial products to bridge the credit gap. Besides, by encouraging customers to adopt digital payment methods, micro and small merchants can spur India’s transformation to a fully digital and cashless economy, as envisaged by the 'Digital India’ initiative.

Kush Mehra
The number of merchants currently accepting digital payments has increased significantly to over 10 million in two to three years from 1.5 million digital payment acceptance locations in 2016-17.  As a result, the financial services sector is making a collective effort to improve the on-the-ground adoption and use of digital platforms among small merchants through fintech education and awareness drives, development of low-cost acceptance solutions, and accelerated merchant onboarding. For the kirana stores to remain relevant in the fast-evolving retail landscape, digital transformation is need of the hour.

One of the key enablers of digital transactions is the deeper penetration of electronic point-of-sale (PoS) terminals. The surge in smartphone adoption and existing low-cost data plans are now driving penetration of new-age PoS machines, which operate on popular mobile operating systems like Android and offer affordable all-in-one solutions to merchants. A merchant-focused company like ours is at the forefront of cutting-edge tech-enabled solutions and our smart Android-powered retail check-out software can not only accept payments from multiple modes, but also integrate the entire billing system of a merchant for seamless transactions. In the future, innovations in the fintech space are likely to be focused on driving ease-of-use among consumers and improving acceptance benefits for the merchants.

Small business firms are at an inflection point as the world around them becomes digitally connected and competitive. At the same, the government’s ambition of complete financial inclusion cannot materialise without the digitisation of businesses —both large and small. For the economy to continue its growth trajectory, all merchants will need to be taken aboard with digital transformation. 

Fintech companies will need to design solutions with merchants in focus to encourage faster adoption. By embracing the digital transformation, driven by a favourable regulatory ecosystem and ongoing technological innovations, merchants have the opportunity to boost business efficiency and increase their contribution to the country’s economy. 



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