5 reasons why consumers still don’t use digital payments

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For many, there is still a lack of trust for digital payments.

By Satyen Kothari

India is well on its way to becoming a trillion dollar digital economy and government departments are actively driving the blueprint to achieve this. The government wants the Indian economy to transact $1 trillion of digital revenue by 2022, and $1 trillion of economic value from the digital economy by 2025. Significant work is underway in the Indian ecosystem to expand infrastructure, increase technology adoption, grow digital consumption, and increase technology adoption, grow digital consumption, and increase data traffic



It is fair to say that the digital payments revolution has well and truly started. However, we aren’t there yet. And there are five major reasons why consumers are yet to warm up to digital payments in a big way.

Trust: For many, there is still a lack of trust for digital payments. There are those that don’t yet feel safe using this as they don’t trust the Internet and the perceived security risks. The perception that someone else has access to your bank account is a deal breaker for many. People in this category may have limited experience with the online world through lack of exposure and understanding of how it works. It’s a big jump into the unknown with your hard earned money, especially if you have no one to explain it to you.

Habit: Their lives are centered around being paid in cash and conducting their own purchasing with cash only. It is the traditional way that business is done in many areas and domains. There is simply no need to change as far as those that always transact in cash are concerned. Dutifully they carry their cash and believe they are safe and in control at all times. Blissfully unaware of the digital payments revolution going on around them.



Transparency: In a country like India there is a perception that having every transaction be tracked could invite trouble via more scrutiny or higher taxes. Cash doesn’t leave a digital footprint which is what some consumers prefer. This isn’t to say that cash is the default for shady transactions or tax evasion. Some people prefer to live their financial lives off the grid. And with cash, they are able to do so quite simply.

Pervasiveness: Cash is accepted everywhere. Digital payments are not. Not yet anyway. It will become much harder for people to avoid it in the future with the economic goals set by the government.



Friction: Cash is an immediate transfer of value. Digital payments, despite recent developments, still involve more steps than exchange of cash. If you can count it in your hand – it’s real – is the mindset of some consumers. It is also cultural. You can immediately show power and influence with a wallet stuffed with notes. Not quite the same effect when you look at a screen that shows a balance.
As valid as the reasons may (or not) be for resisting digital payments, the economic targets the government has set clearly demonstrates the mandate has been set for all Indians. The millennials have grown up with this culture with many gen X and Ys transitioning too. Does this leave just the older generations and remote communities? And what are the benefits of moving towards digital payments?

1. Convenience: Pay from anywhere in the world where you have Internet access, it is especially important if you manage finances for someone else like your parents or other dependents.
2. Saves time: No need to leave your home, office, car, parents’ house or whatever you are doing to make a journey to hand cash over to someone. It also means no need to stand in a queue or wait for someone to get change for you either.
3. Detailed records: Especially important where you manage money on behalf of someone else such as a spouse, parent or other dependents.
4. Track your spending: Use your records for budgeting to get control of your spending. It’s difficult to go back over a month to track from memory where your cash has gone.
5. Security: In the event of fraud you can address with your bank and make a claim.

6. Reduced theft risk: It’s simple to block a digital wallet that has been compromised whereas it is almost impossible to retrieve physical cash that has been stolen from you.
7. Discounts, rewards, and prizes: You may be eligible to accrue points, obtain discounts or even get freebies when you use your digital wallet.