The conventional mode of cash transactions is being replaced by digital payments, perhaps due to fear that currency notes or coins could be carriers of coronavirus.
The Covid-19 pandemic has ensnared the entire world in its grasp and has compelled everyone to grow more cautious with each passing day. With social distancing and stay-at-home advisories echoing around us, we are gradually embracing the new normal lifestyle which entails avoiding crowded places and adopting other safety measures. The pandemic has changed our perception of risk and vulnerability and is certainly changing the way we spend.
It is fascinating to see how technology is playing a crucial role and is significantly helping us to carry out our daily activities. The way we work, socialize, bank, shop or make routine payments has now taken the digital route. We have witnessed an unparalleled dependence on online transactions over the past few months. The conventional mode of cash transactions is being replaced by digital payments, perhaps due to fear that currency notes or coins could be carriers of coronavirus. In one way or another, forgoing cash entirely or as much as possible is becoming a new norm. Thanks to sophisticated solutions like FASTags, NCMC, UPI, QR, and traditional yet reliable payment modes like debit and credit cards, migrating from cash has become convenient.
Today the dependency on e-retail businesses is amplified and consumers now prefer contactless payments, quicker check-outs and hassle-free home deliveries. In the coming days, there would be definite surge in contactless payments and as per the QYResearch report, the global contactless payment market size is projected to reach US$ 10580 million by 2026, from US$ 9362.3 million in 2020, at a CAGR of 12.0%% during 2021-2026. Existing businesses and start-ups are addressing these demands by delivering essential items like groceries through online orders. This shift will accelerate innovation in e-commerce platforms across verticals as new consumer demographics not only include young tech-savvy peers, but also elderly who are embracing digital payments out of necessity.
On the other hand, demand for consumer durable products like laptops, mobile phones, and home appliances are on the rise due to prolonged conditions like work from home, online learning and absence of domestic help. Several consumers are opting for EMI options for such purchases due to availability of ease of making payments or liquidity crunch among other reasons. Nowadays, there are easy EMI options for low ticket size purchases which can be availed at PoS itself. Banks are extending such value added services along with attractive offers to boost demand as it is a win-win for the merchant, bank and the end-consumer.
Digital payments eliminate the hassles of handling cash for merchants as the money gets transferred into their account immediately. Merchants now understand that it also helps to build their credit worthiness while providing an alternate payment option to customers who are cautiously avoiding payments in cash. Hence, from the acquiring standpoint, POS terminals at merchant locations are enabling merchants to accept multiple modes of payments like QR codes, contactless cards, and UPI in addition to cards. New asset-lite solutions like Soft POS can transform mobile phones into terminals which can facilitate features like a tap on phone payments too.
With the availability of cards, rise in affordable smartphones and penetration of high speed internet services across of the country, there are many customers joining the digital bandwagon now, especially due to Covid-19. Going forward we could see more traction and demand in rural areas as it still remains a big untapped market.
Digital Payments are looked as the safest option during this catastrophic situation considering the focus on social distancing but we also need to educate and create appropriate awareness on security aspect of digital payments. Consumers should be very vigilant while conducting online transactions and should not share their banking passwords, card PIN details or revert to emails or calls seeking identity information for KYC purpose etc.
However, there are well established process laid down by regulators, schemes and banks to manage dispute and handle fraudulent transactions. Digital payments are not only safe but also secure given the technology and risk management tools being used by the banks and fintechs. As lockdowns are being lifted and stores are reopening, we will continue to see recoveries in retail sales and concurrent uptick in digital spends because of the increasing confidence of consumers to use digital payment methods.
(By Vishal Maru, SVP – Merchant Payment Services, Loyalty and Digital Payments, Worldline India)