Is India close to achieving cashless economy?

E-commerce companies leveraging the ongoing crisis to innovate and thrive

The global digital payment market has increased significantly in the past few years and similarly, in India, the number of retailers accepting cashless transactions has surged by over 10 million. As of now, China and Norway top the list when it comes to countries with most number of people using mobile payments. However, with mobile technology getting more seamless and various apps and avenues like United Payments Interface (UPI) introduced, the fin-tech market of India is also likely to thrive tremendously in the coming years.

Moreover, with the ongoing pandemic that has led people to adhere to social distancing and avoid physical contact as much as possible, demand for cashless payment has substantially increased. Therefore, leveraging this new consumer trend, many fin-tech companies have started offering digital solutions – from digital payment, billing to geo-tagging, to small retailers. Phonepe for instance has rolled out new features where customers can track open shops lying in close proximity to their location directly from the app. Furthermore, investments in India’s e-commerce space have been pouring in from various multinational organisations which make online payment business most likely to grow exponentially going forward. However, in addition to plain payment businesses, it is by strengthening the relationship between bank and small merchants by providing them a common platform, are maximum revenues most likely to be generated.

Identifying this factor, merchant platforms like Pine Labs have tied up with NBFCs such as Mahindra Finance, Indifi and Flexiloans to offer lending services to SMEs. The company is seeking to build a platform that offers payment as well as simple loans at large. Similarly, BharatPe has also sought NBFC license to enable local kirana store owners to meet their daily capital requirements. Till now, owing to a robust infrastructure, proactive participation from government, industries and e-commerce companies as well as positive policy changes, digital payment market in India has been able to take off. However, it is ultimately the innovation that can lead the market towards greater heights, which looking at the current scenario, is highly possible.