Author: Siddharth Arora, Co-founder & CEO, ePaisa
We live in a world where smart phones are not just mobile devices that make calls, they are your compact entertainment box, your reminder of important tasks, your calendar and so much more. It’s difficult to picture a world without smart phones and tablets these days. Not only have they evolved themselves but they have evolved along with humans. These devices have also changed the way we buy. In the last few years, not only have the consumers bought in-store and online, they browse online on their smart phone while in the store discovering products on the Web and paying for it simultaneously.
This shift or transition is largely technology driven, as consumers expect a more integrated buying experience that is quick, consistent, secure, and available wherever they happen to be, at anytime, and through any mode of payment. But is this new? Maybe not, but in the next few years you will see a fundamental change in the way payments are done blurring the lines between traditional online payments and offline payments.
Image Source: Economic Times
As reported by Economic Times, cashless transactions channeled through credit cards, debit cards, NEFT and mobile wallets sums up to approximately Rs 92 lakh crore. Mobile payment modes (m-wallets, mobile banking, and IMPS, India’s real-time payments service) represent a miniscule portion of the total cashless transactions. 50% of transactions are towards remittances whereas the rest contributes to bill payments, recharge and more.
However, the rapid uptake of companies such as PayTM, FreeCharge & Mobikwik points towards the growing opportunity. Analysts forecast the m-commerce market in India to grow at a CAGR of 71.06 % over the period 2012-2016. The transition from cash payments to m-payments is happening in a big way which is reflected in a recent survey conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM). As per the findings, major metro cities are fast adopting the technology and has seen a 198% rise in the value of mobile wallet business in 2014-15 to Rs 8184 crores.
We at ePaisa are also pushing the envelope even further in the mPOS space. These technologies will further make inroads in creating newer shopping experiences for the consumer. Although the stage is set for an increased momentum for an overall shopping experience, there are some aspects such as moving faster to a cashless economy, implementation of mobile technologies and most importantly the government’s role in helping sustain this growth trajectory.
Online Brands moving Offline and vice-versa for continued growth
Rapid technology adoption coupled with access to the Internet through broadband, 3G has lead to a staggering rise in the online consumer base. India’s ecommerce market is likely to have a whopping 100-million customer base, as per an estimate by Google and Forrester Consulting on online shopping trends. To reach out to this consumer base, offline brands are knocking the online space while online brands are moving offline causing the schism between online and offline player to disappear.
With brands such as Flipkart and Amazon having a significant presence online, their offline existence has only recently improved. However, it is not expected for every online player to build a successful presence offline as well. Thus the move to shift offline becomes imperative when capturing the rural and the Tier 2-3 cities.
One such move that caters to this motive is being carried out by PayTm in the mobile payment space. With over 50000 kiosk across the country, PayTM allows customers to load their wallet with cash offline. By moving offline, PayTm hopes to increase its growth and resonate with its already significant online presence.
At the heart of this move lies the understanding that while value-seeking consumers will be drawn online, experience-seeking shoppers will gravitate towards brick and mortar outlets.
Challenges and Opportunities in creating the ecosystem of cashless transaction:
For the cashless mode of transaction to succeed it is essential that Government should form appropriate regulatory regimes and abolish the system of seeking approval for moving from one payment system to the other.
India, with cash in circulation amounting to 13% of gross domestic product (GDP), remains a laggard when compared to developed countries. Sweden, where coins and bank notes constitute just 3% of GDP, is a global leader in moving towards a cashless economy. The US, Canada and Singapore are other notable examples where a majority of consumer spending already happens through electronic means.
The Road Ahead
The mobile point of sale is seen as an ideal way to bridge the online versus offline gap for large organizations and retailers. Customers need human interaction and these mPOS devices will connect sales agents to digital information and mobile payment systems. The more connected mPOS readers are with your backend systems, the easier it is for businesses to adopt these technological advancements and keep customers rolling in. A win-win situation for all.
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