Payment solution though fintech in India

Abstract

India, an emerging economy, one of the fastest growing economies in world is experiencing development in almost all the industrial sector. With the growth of economy per capita spending has also increased significantly over the last 20 years. However, our economy is still cash dominant. In Scandinavian countries where cash transactions are only 4% of the entire transaction volume, in India the number stands at 78% according to Euromonitor report. This gives rise various complications such as less accountability, black money, fake currency, lack of security, systemic inefficiency etc. Over the last two years, there have been numerous new ventures in the domain of cashless payments through wallets- which are prepaid digital instruments that can be used for low value transactions. The primary focus of these ventures have been the tech-savy, urban, educated hi income group. Through our research we have tried to explore the other segment who can also be benefitted by use of wallets. Periurban sector emerged as a huge chunk of the population who are aspirational and a potential easy adopters of a service that can enhance ease of payment. We have also explored the reason behind such high prevalence of cash in the transaction space in spite of having multiple modes of transaction like IMPS, internet banking, debit and credit card. From our interviews it emerged that lack of acceptance of these modes in majority of retailer as well as psychological barrier among the users is the reason behind it. We have also explored how mobile wallets ease the complicated clearance and settlement process by its innovative design and add efficiency in the system. However, there are multiple roadblocks in the process of full functional wallet implementation or any other cashless transaction method such as infrastructural issues, lack of education, concerns with security etc. which will take its due course of time to come together in condition which will be conducive for acceptance of these innovative modes of payments. Government of India has realized the potential of cashless mode of transaction and has taken up multiple initiative to encourage cashless environment. They have given recognition to various wallets and brought them under regulatory purview to attract more trust from the users of the wallets. Government of India has also issued payment bank license which is going to play a crucial role in financial inclusion of the unbanked population. UPI or unified payment interface is also one more initiative by the government which will make inter-operability between wallets and other transaction instruments easier. Our report explores several other modes of making payments through Wallets along with the crucial enablers who essentially are the stake holders who have to come together to make wallets a success.