It’s well known that demonetization of the currency last year had led to a sharp rise in digital transactions. Since then, while the month-on-month rise may not be as high, a recent report by the Centre For Digital Financial Inclusion (CDFI) shows a clear growth in the intent to go digital among the 600,000-odd traditional grocery retailers or kirana stores.
The report says that 63% of the kirana stores, especially in the tier two-three markets and semi-urban areas want to go cashless. Around 45% of these stores are willing to buy POS (point of sales)machines. “They all have to pay merchant discount rates and that’s the biggest barrier. Not only are they willing to go cashless, they are also prepared to pay the transaction charges as they see a sustainable business model,” points out Krishnan Dharmarajan, Executive Director, CDFI.
Earlier, only 5% of the retailers were using POS machines. “While people are saying that this number had gone up during the demonitisation days and is now coming down, we are saying that the story has not started yet,” says Dharmarajan.
However, it is mobile payments that is actually seeing a surge. Not only are the kirana store owners opting to pay distributors and wholesalers through their mobile wallets, the report says that even consumers living in smaller towns are equally excited about buying using mobile wallets. “People are willing to take the first step of signing up, then they will move to the second stage and the real transaction will happen that’s when the boom will come,” explains the CDFI head honcho, according to whom 42-45% of the small town retailers are wanting to use mobile wallets.
He says that 94% of the kiranas store owners have mobile phones, out of which 41% have smart phones. Out of that 80% have internet. Similarly, 86% of the consumers in smaller towns, as per the report, had mobile phones out of which 36% were smart phones. Only 16% of the smart phone owners actually used mobile payment. “These numbers are actually going up because of 4G. Only 3% of the kiranas were actually offering mobile payments till March this year. There is a huge difference between aspiration levels and what they were actually doing. If one taps the market, it will definitely become big,” says Dharmarajan.
There is awareness that mobile is cheaper than POS and that is what is attracting the kirana stores them to mobile payments.
“Month on month if you compare it with the previous year, there is a significant difference. What you need to understand is what you observed as the peak during demonetisation was only the 5% usage on the kirana segment. The real story has to unfold,” reiterates Dharmarajan.