A Direction to the cashless World

 

When did you last conduct a financial transaction? Probably a while has passed since then. Credit and debit cards are still the most extensively used payment methods, although online payments, cash transfers, and e-wallets are also growing in popularity. Cashless transactions are favoured for a number of reasons, including ease and security.

According to a 2018 survey of 1,222 consumers by the payment company TSYS. Only 14% of respondents said they preferred paying with cash, while 54% said debit cards and 26% said bank cards. The preference for debit cards climbed by 10% between the 2017 and 2018 reports, which is noteworthy because it shows a consistent trend toward cashless transactions. A different survey conducted by the Diary of Consumer Payment Choice revealed that consumers carried an average of $59 daily (DCPC). illustrating that cash is usually used for small purchases. The same data emphasises that only when the entire payout was less than $10 were 55% of payments made in cash. The usual cash holdings over time by age group are shown in the following graph:

 

The Story of Indian Digital Payments' Success

For a very long time, currency was king in the Indian economy. However, more people are using smartphones. Additionally, the economy is using more digital payments and relying less on cash thanks to a supportive regulatory environment.

 

THIS STATISTA REPORT EVIDENCES THE INCREASE IN MOBILE PHONE TRANSACTIONS OVER THE LAST FIVE YEARS:

 

The overall amount of digital transactions in India surged by 51% to reach INR 3,133.58 Crore in 2018-2019, the parliament reported in a statement from July.

 

A study by Assocham-PWC India predicted that by 2023, digital payments in India would grow by more than 100%, from $64.8 billion to $135.2 billion. According to the research, India's CAG of over 20,2% will cause it to have "the largest increase in digital payments" between 2019 and 2023. It was also predicted that between 2019 and 2023, India's share of digital payments will rise from 1.56 percent to 2.02 percent on a global scale of transaction volume.

 

According to a study by the Economic Times of India, debit and credit card transactions remained at 2.9 billion up to September, mobile wallet transactions were at 2.1 billion, and UPI transactions were at 1.5 billion, highlighting the shift from cash to cashless transactions. Business-to-business (B2B), peer-to-peer (P2P), and person-to-merchant (P2M) transactions that are made possible by digital transactions at the actual point of sale will be the key contributors to this estimate.

 

The 2016 initiative to demonetize cash greatly raised awareness of digital wallets. the promotion of digital payments at gas stations, toll booths, insurance websites, and other commercial locations; the extension of the digital payment infrastructure into rural regions; the loosening of PPI laws. The introduction of Bharat QR codes has also contributed to the dissemination of technology. Prepaid payment instruments are the segment of the market that is growing the quickest (PPIs). Ten percent of all digital payments are now made using it, and it has grown at a CAGR of 97% during the same time frame.

 

Despite the fact that PPIs also include things like prepaid gift cards and other paper coupons.

 

DIGITAL PAYMENT TYPES

• Mobile proximity wallet with a focus on individual devices

The mobile device's wallet stores the user's payment details. These credentials enable proximity payments when MST or NFC (Near Field Communications) are used at the point of sale (Magnetic Secure Transmission).

• A device-specific in-app wallet for mobile

When a debit or credit card is not available, this wallet is utilised to make in-app transactions. The in-app payment is processed by this wallet using the EMV transaction code along with the issuer's identification and authentication.

• Device-specific in-app mobile wallet

In the absence of a debit or credit card, this wallet is utilised for in-app transactions. To complete the in-app transaction, this wallet employs the EMV transaction code along with the issuer's identification and authentication.

• RFID wallet

These wallets are cloud-based and device-neutral, just like CNP wallets. To complete the POS transaction, QR codes are needed. An example of one of these cashless wallets is Paytm.

• Making a cashless payment with a digital wallet

 

The payment networks provide issuers and merchants with virtual checkout pockets or digital acceptance services. The networks are compatible with mobile apps, online browsers, and in-app channels.

 

WHAT IS POWERING THE REVOLUTION IN DIGITAL PAYMENTS IS CHANGE:

 

The rise of digital wallets has been fueled by four major technological advancements:

1. the latest revolution in advanced digital
2. the involvement of odd players
3. the advent of a tech-savvy, pickier consumer

 

Let's go over each one individually:

 

The latest revolution in advanced digital

Around 75% of the world's population is anticipated to have internet connectivity by 2020. 80 percent of these people will primarily use their mobile devices to access the internet. Over time, smartphones have improved and now provide more sophisticated functionality. Additionally, they include premium features like strong CPUs, a tonne of RAM, excellent cameras, barcode scanning, GPS geotagging, NFC-based devices, social media platforms, etc. Any mobile user has the power to promote trade with all these armors.

The rise of mobile phones has made it possible to use new payment methods. Along with advancements in payment access and security technologies including hardware-based safe element techniques, biometric multi-factor verification, EMV standards for identity verification, NFC readers at vendor storefronts, card information tagging for fraud reduction, etc.

 

The involvement of odd players

In addition to financial and fintech enterprises, there are additional businesses in the digital cashless wallet sector. Players from a variety of industries have entered the market over time. These industries include tech and e-commerce giants like eBay, Alibaba, and Amazon, as well as gadget makers like Apple, Samsung, and Google, telecom providers like Vodafone, Orange, and Airtel, and start-ups like PayTM and FreeCharge in India, Google Pay, and others.

an expanding number of Fintech businesses. It is anticipated that the market disruption for digital wallets will get worse. The number of these start-ups has doubled over the last five years, while investment has increased by a factor of six. Payment-related Fintechs, which include anything from wallets to connected POS systems, P2P payments, cross-border transfers, etc., have received the majority of funding for the whole Fintech business.

 

The advent of a tech-savvy, pickier consumer

The ease of financial transactions is just one of the numerous reasons why today's tech-savvy consumers have shifted to the digital channel. Customers' expectations are evolving away from payment solutions as non-banking IT players, merchants, and e-commerce businesses grow. In order to live up to these expectations, new features like Starbucks' integrated incentives and ApplePay's biometric authentication must be modified. The modern consumer expects a smooth experience from every brand interaction they have online. Because of this, user-friendly and intuitive design and development are becoming increasingly important.

According to projections, digital wallets will provide frictionless interaction on smartphones and applications, boosting and expanding client engagements to keep up with changing customer expectations.

 

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