Low internet penetration rates coupled with a high level of digital distrust, are surmountable challenges due to a “solid foundation”

Even before the coronavirus pandemic boosted digital commerce in India, a phenomenal growth of 383% had already been seen in digital payments.

During 2020, nearly Rs 3.9 lakh crore UPI transactions were recorded in November 2020 alone. For 2020-21, the Centre has set a target of Rs 4,630 crore for digital payments in India. With fintech emerging as a key sector, this figure is likely to be exceeded. With the smartphone market continuing to grow, several fintech apps are expected to facilitate the growth of digital payments in India.

One app that focuses on offering next-gen neo-banking solutions through a Unified Open API Platform is PaySprint. Its Chief Executive Officer, S. Anand, intends to tie up with various banks to provide digital banking solutions to end consumers. While banks continue to be the custodian of various banking products and services, his firm will drive larger consumer adoption, bridging the gap by offering its customers a single-unified platform with a myriad of solutions for complete financial support.

S. Anand, Chief Executive Officer, PaySprint

Still a cash-driven economy

It is undeniable that India has seen a huge acceptance in a digital transaction, but it still remains a cash-driven economy, Anand said: “The year 2020 saw India’s digital economy grow. This has been purely been possible through JAM: Jan Dhan accounts, Aadhaar & Mobile/smartphone penetration. These have helped shape the digital economy, even though the reliance on cash is largely out there. Nevertheless, there is already a solid foundation laid for Indians to go cashless in the near future.”

According to Anand, cash payments are still accepted as the easiest, most trustworthy and convenient mode of transaction. He added that it is important to create a payment solution as simple as cash transfers. Earlier, India witnessed resistance to net banking and cards since they were more of virtual payments. Through the advent of UPI and QR codes, this has been addressed.

“We have to understand that a single method of transaction would not work in India. It is important for the infrastructure to support multiple modes. As there are several issues, including lack of digital penetration in rural areas, and low smartphone penetration—the challenge lies in creating a robust infrastructure that is seamless and frictionless as a digital transaction interface,” Anand asserted.

Also, digital literacy has to improve in the country, what with a considerable populace (rural masses and senior citizens) still wary of digital transactions. A significant portion of the country has no or limited access to the Internet as well. To achieve the vision of digital and cashless India, Prime Minister Narendra Modi recently announced the PM-WANI scheme to boost Internet penetration in the country. As of now, the penetration rate is 40%, compared to 61% in China.

A matter of national distrust

If the country properly addresses the needs of its citizens and ensures security, therein lies a huge market demand for digitalization and probability of becoming a cashless economy. According to Anand, a good, seamless technology has to ensure safe transactions, and adhere to the guidelines and policies. “Over a period of time, the technology being built should be robust, including all the verification and validation. We, fintech companies, spend a lot of time to validate data to instill confidence in users. Since this field is trust-based, it is important to build it with a lot of checks and balances,” he explained.

Stumbling blocks stand in the way. For instance, Bharat Interface for Money (BHIM), a money transfer app from the National Payments Corporation of India (NPCI) had been under the radar for potential breach of sensitive information, despite the NPCI’s denials. In order to take swift action against any scams, the Reserve Bank of India (RBI) has created a central payment fraud information registry. Regardless, as a result, a huge chunk of the Indian population has become wary of digital payments.

Where low internet penetration and high national distrust prevail, is where PaySprint can step in. The firm provides a unified open UPI platform of all kinds of financial services, mitigating the low penetration across the country. In Anand’s words: “There is a huge opportunity for this in Tier-3 and Tier-4 cities. It is important to understand that digital payments help in creating a lot of data points to lend money.”

A 20-year wait

As studies have shown that the older generations find it difficult to adapt to digital transactions, fintech companies usually segments usually adults aged between 21 and 38 years. However, senior citizens cannot be ignored. “For both the rural and elderly segments, the method that would work is the assisted model. A pilot model by the banks is under discussion among fintech companies to provide home delivery of financial services,” noted Anand. He said the future for India is a combination of cash and digital payments, though digital would increase and create a positive trend.

“It would, anyway, take at least 20 years before India can become a cashless economy. The next 10 years would form the base of proliferation in terms of digital payments. We, at PaySprint, aim to develop the latest technologies, innovative payment solutions, and enough entrepreneurs who can go to the markets much faster than to opt for finance solutions,” said the optimistic CEO.