AePS surge shows cash is king again, for now

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Published: May 11, 2020 8:36:00 AM

Average daily transactions via Aadhaar-enabled Payment System (AePS) surged to 11.3 million in April, making them an outlier.

Cash is convenient and reduced mobility has done little to change that even if it is a temporary phenomenon.

Average daily transactions via Aadhaar-enabled Payment System (AePS) surged to 11.3 million in April, making them an outlier. Unlike peers Unified Payments Interface (UPI) and Immediate Payment Service (IMPS), AePS emerged a winner amid the lockdown, piggybacking on government transfers to the disadvantaged. Cash is convenient and reduced mobility has done little to change that even if it is a temporary phenomenon.

As Yes Bank MD & CEO Prashant Kumar pointed out, much of the spending relates to basic everyday requirements at shops that deal in cash. “The spending is only for taking care of the kitchen and is taking place at neighbourhood shops which have always been accepting cash. So, basically cash becomes more convenient at this point of time,” Kumar said. He believes that as e-retailers open up for more business, the purely digital modes of payments will catch up.

Also, as Anand Kumar Bajaj, founder and CEO, PayNearby, explained, beneficiaries of schemes such as the JanDhanYojana habitually use cash, “The segment of the population that the government is making transfers to anyway deals in cash. So right now, cash is in because there is no other option,” Bajaj said.

As people turn wary of using ATMs in the middle of a pandemic outbreak, banks and non-bank players in the payments system have had to find ways to reach cash to their doorsteps. In some cases, they have had to remove charges on cash transactions in order to ease the flow of money.

Ashish Ahuja, chief business officer, Fino Payments Bank, explained that at a time when remittances by migrant workers have crashed by 70%, the flow of cash needs to be eased. “We have removed charges on cash deposit transactions and tied up with BPCL to ensure cash availability with minimal movement by people. They can locate the nearest cash point using an app,” Ahuja said. He adding that transfers from government would continue over the next few months it was important the railroads to access these be in place.

Demand for cash is high not just in rural locations, but even in metros, with banks and fintechs getting calls from various resident welfare associations (RWAs) to offer doorstep cash withdrawal services. Suppliers of payment acceptance equipment said that banks have been placing more orders for mobile and micro ATMs of late.

At the same time, the industry’s drive to on-board more offline merchants for digital payments has taken a backseat as social-distancing norms apply, according to Mahesh Ramamoorthy, regional managing director, APMEA – banking solutions, FIS. “A lot of people applied to become a merchant right after the lockdown, but not all of them could be on-boarded,” Ramamoorthy told FE.

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