United by the flag, divided by payment systems — The hurdle in the rise of Digital India
By: Robin Singh
Tags: Digital Payment, Payment Systems, Digital Transformation, Technology, India

As I made my way from the Metro to the train station at Chandni Chowk, I looked around at the stripes of e-rickshaws and traditional rickshaws waiting for fares. It was like being in Delhi like it was 2015. I will not talk about them doing business without a mask. That’s a government problem and WHO’s problem to deal with. The missing piece for me was that none had a merchant UPI QR sticker or a UPI pad. And then it hit me, how a small utility like a UPI pad can affect consumer behavior and buying decisions across populations especially millennials and generation Z. I was ready to walk 1 km with a 10 KG trolley bag to avoid the ordeal of me asking them whether they accept digital payment.

As I started walking towards the railway station, I asked one rick if he accepts digital payment. To my surprise, he said yes, I do. This left me confused, as I could not find a UPI Pad. I made my way to the backseat and prayed to avoid any last-minute payment hassle as my train was leaving in about 20 minutes.

“What’s your name?” I asked the rick driver out of curiosity.

“Laxman Prasad” he responded instantly.

“Laxman Prasad ji, do you use Google pay or Paytm?” I asked the rick driver once we took off from the metro station.

“None, sir. I know people at the station who can pay me cash. You can pay them, don’t worry.” He replied in his subtle shyness of not being from the same century.

And I said to myself ‘why am I not surprised.’ The problem is I live in a city where even a street hawker uses a UPI pad for payment. And I am used to the way it works. Looking back to the 90s and early 2000s, we’ve come a long way as a nation. Back then we were divided by creed, culture, and commandment. Such predicaments drove the economy and businesses across India. Now we are divided by habits and our ability to adapt.

We reached the destination in about 10 minutes and Laxman started requesting merchants nearby to help him with the payment. I could tell I was his first fare of the day. Turned out the merchants at the station were not so friendly as Laxman thought. After a few failed attempts, I asked a juice vendor to help him with the payment and me with a fruit shake. And we were on our way.

Why micro-merchants in India are so inexorable? Even after constant efforts from CM Malladi(Co-founder, PhonePe), Sajith Sivanandan(MD, GPay), Vijay Shekhar Sharma(Founder, Paytm) among others only 16% of the Indian population uses Digital payments. Surprised, so was I. Out of 59 Million Micro Merchants in India only 1 Mn are accepting digital payments. These are post-pandemic figures. And yes, they are shocking. Especially for someone for whom digital payment is a part of everyday life.

Hollow marketing efforts will not help 39 leading organizations driving UPI payments in India. A mass drive or a mass peer-to-peer campaign holds the key to acceptability. Remember how LIC rolled, back in the 2000s, recruiting agent after agent till they reached 290Mn policyholders. Or how Sahara successfully on-boarded more than 100Mn scheme buyers. Mass marketing is glamorous. But not so effective when the task is to build trust and change behaviors.

Micro-merchants in India account for INR 23000 Cr’ worth of transactions every year. That’s 1% of India’s GDP, which is suffering. This 1% belongs to the community that earns from hand to mouth. These are people who would die starving before the pandemic gets to them. And hence should be the prime focus for the UPI aggregators to have them on board, make their life easy, and bring about the change they expect. Illiteracy and lack of awareness have crippled them. It will be interesting to see how digital payment leaders will make this happen. And I am sure we’ll see this change in 2021. It’s about time we find out how.