Have you ever visited any remote village with limited to no internet access? While you may have experienced this only a few times, gaps in internet connectivity remain a concern for the majority of India’s population. In fact, poor infrastructure coupled with digital illiteracy is the primary reason behind the slow adoption of digital payments in rural areas.
According to ET statistics, only 20.26% of rural and 64.84% of the urban Indian population have direct access to the internet, thus rendering the rest untapped. Despite the evolution of digital payments in India, the rural-urban divide continues to exist. Even today, unbanked pockets of the country rely heavily on cash, making it the most ubiquitous payment method. An obvious query that follows then – How can we address this discrepancy and pave the way for large-scale adoption of digital methods of bill payment? This is where FinTech comes into play.
FinTech: Bringing the bank to the underserved
The digital payment landscape in India has grown up and grown out and is steadily moving forward from its nascent stage. There are prominent changes in the technologies related to the bill payment sector and financial transaction, with pervasive mobile apps and websites gaining more ground. However, most of the Fintech giants tend to overlook the underserved segments of the population, only concentrating on the urban quantum. Against this backdrop, the need of the hour is a solution that offers both the convenience of technology and the ease of use of cash.
Mobile vans comprising mini ATMs and bill payment kiosks can be a low-cost yet secure way to bring the benefits of digital banking to the remotest corners of India while eliminating the need high internet connectivity or any particular hardware. This, if implemented across the country, can be a boon for the underserved segments of the population. Let’s see how it works. The bill payment kiosk accepts cash as a bill payment mode and makes the transaction digital, in addition to accepting credit/debit card payments. The mini ATMs, on the other hand, enables users to withdraw cash without having to visit the bank’s physical branch. Moreover, this entire process takes place in real-time, thus ensuring security.
While one may wonder about its viability, new-age FinTech players are leveraging their technical expertise and partnering with major banks to further this model in India. It is, therefore, a win-win situation for both the involved parties – rural dwellers can have easy access to banking facilities and other financial services, whereas banks can expand their reach to the hinterlands of India.
The growth of FinTech in the time of corona
Home to over half a billion internet subscribers, India has fast emerged as a prominent digital economy. With the increased availability of budget smartphones and cheaper data plans, the nation is leading the digitalization race, trailing only China. India has also witnessed increased adoption of digital payments in recent years, and the trend is believed to continue for the upcoming years.
However, the coronavirus pandemic may have brought in new challenges for the payments industry in the country. The sheer size of India’s population and its limited health resources sparked an austere response to check the spread of the virus. The government closed all international borders, banned interstate travel, and eventually imposed a nationwide lockdown.
These measures, albeit necessary, could impact the deployment of mobile ATM vans in small towns and villages. At the same time, the situation can persuade the rural dwellers to finally make the transition from cash to digital payments. The government, banks and other financial institutions are expected to further drive this shift by creating awareness and waving off charges on digital transactions. The result is already visible, with nearly all digital payment platforms seeing a sudden spike in the number of users over the past couple of weeks.
Most of these transactions are mainly for utility bill payments, including prepaid and postpaid mobile services, DTH and electricity. Besides urban India, those residing in the hinterlands are also taking to digital channels to pay their monthly bills. While it’s too early to gauge the impact of the COVID-19 on the digital payments industry, but it can ultimately pave the way for large-scale adoption of digital modes of payments in India.
Views expressed in this article are the personal opinion of Rohit Kumar, CEO and CMD, XPay.Life.