Feasibility study of cashless payment mechanisms using mobile phones in India

Abstract

In India, most of the people prefer to use cash; 65% of all transactions happen through cash payments. There has been reluctance on the part of the people to opt for non-cash methods of payment. The popular cashless payment mechanisms are the credit cards, debit cards – which have been in place for some time now and new technologies such as Tap and Pay mechanism on mobile phones. Only a small percentage of the population uses these modes of payments. Debit cards and Credit cards have failed to penetrate to the lower strata of the society. The tap & pay mechanism has failed to take off. Only about 13% of Indian population still uses Debit Cards. Only 2% of population uses credit cards. Therefore there is a need for a solution which has mass appeal. It could be seen that that the Mobile phones are the only medium in India which has mass reach. A lot of people in India don’t have bank accounts – but they use mobile phones. There has been a huge proliferation of mobile phones in recent past. Currently There are 600 million mobile phone subscribers in India (CAGR of 60% over last 5 years) . The mobile phone penetration is expected to go to 100% by 2015. Thus we believe the mobile phones are the right platforms to drive cashless payment mechanisms.