Why merchants in India Should start adopting digital payments
The Covid-19 pandemic and social isolation norms have
resulted in a sharp decline in footfall in most retail and shopping outlets
across India. More and more people have turned to online shopping for groceries
and other essentials.
Despite the drastic reduction in consumer spending,
the Coronavirus outbreak has boosted the demand for digital payment facilities,
even at neighbourhood kirana stores. The reasons are manifold. Digital payments
can help keep customers safe by limiting in-person cash transactions and
reducing contact with the virus. With the surge in online shopping in the Covid
era, many merchants have moved online from brick-and-mortar stores. They have
set up digital shops on marketplace apps with delivery options like Amazon,
Dunzo, Swiggy, Zomato, etc. Some have even enabled phone ordering services
while others have built their own websites and mobile apps, equipped with a
complete end-to-end simulated shopping experience.
In this modern, fast-changing business ecosystem,
merchants need to adopt digital payment methods such as UPI, IMPS, and prepaid
wallets, to support customers and provide them with a better and more
convenient shopping experience, without compromising on security features.
These solutions can help merchants expand their customer base, serve a larger
geographical market, improve customer satisfaction and retention, and increase
profitability.
New Opportunities for growth and Development of digital payment solutions in india.
The digital payments ecosystem in India is thriving,
with new payment channels with cutting-edge security features and the best user
experience regularly being introduced to customers. An important driver for
this demand is the Digital India initiative and the Government of India’s push
for a truly cashless society which has given a fillip to India’s dynamic
payments infrastructure by paving the way for many innovations. Currently, UPI,
launched by NPCI, supports the majority of India’s digital transactions. There are
other modes of digital payments such as QR payments, wallet apps, IMPS and USSD
payments, prepaid bank cards, contactless PoS terminals, BHIM app, etc. That
allow people to enjoy the benefits of cashless transactions.
The demand for digital payments is also fuelled by
affordable and improved mobile Internet connectivity and growing mobile
penetration among a burgeoning millennial population who are embracing it more
eagerly and confidently with every passing day. The e-commerce boom has also
boosted the demand for quick, hassle-free, and secure digital transactions.
While most e-commerce websites and apps started with limited payment options
like credit and debit cards, now they have multi-payment pages with new-age,
innovative payment methods for an improved shopping experience.
The cash-on-delivery model is also gradually being replaced by digital POS, even for online shopping. The number and total value of digital transactions further increase during the festive season and flagship sale events.
The cash-on-delivery model is also gradually being replaced by digital POS, even for online shopping. The number and total value of digital transactions further increase during the festive season and flagship sale events.
The Reserve Bank of India has introduced measures to
promote digital payments in India, such as the proposed Acceptance Development
Fund to help small businesses, especially in tier 3 and tier 4 towns, build
digital payment infrastructure. The RBI has also mandated the creation of an
internal ombudsman by PPI issuers to address the concerns of fraud and
transaction failures among wallet users. This move will further instil user
confidence in payment wallets.
Revision of interchange fees on credit and debit cards by major payments networks will also bring more small merchants into the fold. Moreover, proposed measures such as relaxation in the ‘tap-and-go’ payment limit from ₹2,000 to ₹5,000 will reduce the need to swipe cards for larger transactions and encourage the adoption of safer, contactless PoS payments.
Revision of interchange fees on credit and debit cards by major payments networks will also bring more small merchants into the fold. Moreover, proposed measures such as relaxation in the ‘tap-and-go’ payment limit from ₹2,000 to ₹5,000 will reduce the need to swipe cards for larger transactions and encourage the adoption of safer, contactless PoS payments.
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