One of the issues we have all experienced first hand after the demonetization of high-value currency is that certain segments of the population struggle more than others in a cashless scenario. Small traders do not accept plastic – poor people do not have bank accounts or do not use them much – rural India requires credit but lacks credit cards.
To quote an article in Hindustan Times, only 28%-32% of Indians have access to financial institutions, including post offices and banks. Further, 33% of the 138,626 bank branches are in 60 Tier-1 and Tier-2 cities, leaving rural India at a huge disadvantage. (Source : Hindustan Times)
Therefore, it becomes important to look at digital channels as a means to provide access to banking, payment and credit facilities. In fact, this may be categorised as one of the priorities for Digital India.
The answer in many emerging markets including Africa and China has been the Mobile Wallet – familiar to Indians in the form of brands like PayTM and MobiKWIK. Thanks to restrictions imposed by the government, the format of the digital wallet was off to a slow start in India but has warmed up considerably in the last 2 years. India now has over 40 mobile wallet services and according to a recent research from Nielsen, 58% of small town users are utilising them (Source : Nielsen)
(Source : Scroll)
However, e-transactions still make up only 10% of India’s cash-dominated economy and plastic (Credit and Debit cards) still, have the lion’s share of it.
In contrast, the P2P (peer to peer) ecosystem created by mobile wallets is huge in Africa. To give an idea, sub-Saharan Africa has less than 30 million bank cards in circulation but has 150 million mobile wallet accounts with an estimated $90 Billion transaction value. (Source : Techcabal)
How can we build a strong user base for mobile wallets in India? Greater relaxation of norms by the government, interoperability and integration with offline payment and recharge are obvious measures that come to mind. But from a platform and app development perspective, I propose three measures that can be taken even by existing operators to increase both users and use cases for mobile cash
- Offline operability: A lot of payment failure at the point of purchase happens due to network issues, and this is something all of us have experienced even when making credit card purchases. A mobile wallet needs to be online when you recharge, but spending/purchase can be triggered through an SMS-based system that works offline. Apps like Gurgaon-based Baxi are able to work offline. Effectively, a digital wallet should be able to work on any phone sans data connection (and by that logic, it should work on a non-smartphone too. Let’s not forget that nearly 70% of India uses feature phones). This will automatically increase the potential reach of a mobile wallet to include every Indian user.
- Vernacular User Interface: Online financial services are often designed with a bias towards English users. This is not a conscious choice but a reality in a country where English was for a long time the gateway to the internet, creating a serious barrier to digital inclusion. Even today, the vernacular internet struggles to catch up with the English one. It is not enough to just translate words into local languages, we need UX designers who ‘think vernacular’ to design interfaces that are comprehensible to local language users. And we need extensive app prototyping and user testing to ensure that users ‘get it’
- Human Centric Design of app experiences: Already a buzzword in the international development sector, human-centric design will play a critical role in financial/digital inclusion as it directly impacts app development. Human-centric design can lead us to design apps and services completely differently. For example, in South Africa, there are traditional informal credit networks called Stokvels, which have gotten a new boost through Whatsapp groups, facilitating young people to access credit for their businesses. This behaviour could form a basis for designing social credit services. Similarly, a mobile wallet integrated with a chat interface could help to build user trust and stimulate more peer to peer transactions.
At the opposite extreme from India is Sweden. The country which first introduced bank notes might be the first country that no longer needs them, with bills and coins representing just 2% of the economy. Sweden has seen many benefits from going cashless, including a drop in mugging, thefts and a more profitable banking system. In the Indian context, we can add the benefit of reducing black money circulation. Of course, there are attendant risks like the increase in the potential for electronic frauds. But I tend to believe that it’s better to have a population that is technologically educated and reaps the benefits of the digital era, rather than play it safe. Technology also leaves trails that allow us to catch fraudsters and recover money.
I look forward to a digital India that advances the case for a more cashless economy, including a majority of Indians and making their daily living more convenient and pain-free.