Why online payments are the way forward?

Karanvir Gupta
Have you ever observed the changing ways of making payments? How the entire system has evolved over a period of years? I remember the anxiety to pay BSNL bills in time just to avoid the longer queues nearing the due dates. And rushing back homes to get the wallets (read cash) in case we forgot them. The unnecessary hassle at the vegetable vendor for petty Rs5 or Rs10 short. And more than anything else, the unavoidable queues at banks or ATMs to withdraw cash in the early days of the month.
I don’t see them anymore. Neither do you, I believe. All of this has become quite rare. But what revolutionised the system to a state that is present today? Why it became so important to transit from a hard core cash based society to a less cash economy? What was the need to do the same? What does it mean for end customers like you and me? What does it mean for the businesses? Where are we headed to in the larger schema of things with this small-BIG step towards digitisation of Indian economy?
I might not be able to answer all of these at a go in detail but can surely build for a cause as to why Online Payments are The Way Forward! We are undoubtedly one of the fastest growing economies in the world. To go by figures released in Feb’18, India at 7.2% annualised GDP growth rate regained its title of fastest growing economy in the world followed by Chinna pegged at 6.8%. Faster the economy grows, implies more the transactions, ease of convenience for consumers to buy products and services. It also means more complexities in financial and accounting systems. The need? A comprehensive solution to address all these challenges.
The challenge doesn’t stop here. We are standing at the cusp of being a Smarter (may be soon smartest) Nation of the world. By announcing to the world the list of 100 cities that would be world class, technologically advanced, eco-friendly – under Smart Cities Project – we have opened a pandora box of challenges but at the same time, a plethora of opportunities. And advancing the payments infrastructure of an economy comes natural to this process. Because only if you make it easy for the end consumers to consume products and services and build efficient systems for the businesses to collect money – then the dream of building a smarter city can see the light of day.
While you and I might see payments just as the money we pay to buy food, clothes, avail services and pay utility bills; there are nature of payments that happen from Business to other businesses (otherwise called B2B payments). Online payments aim to address both ends of the spectrum. And that is why it is important for us to implement various payment modes in our day to day lives.
It had all started in 2013 when the foundation stone for Aadhaar was laid and the real push came with Demonetisation in November 2016. This left the consumers like us without cash in hands. Some of us might detest it but it caused many of us to start using various modes available to make payments online. From Digital Wallets to Payment Gateways, they started offering niche services in the payments space. National Payments Corporation of India (NPCI) launched BHIM app followed by UPI payments, (on the way to release UPI2.0) and BharatQR to further push the cause. For once, we could see competition that is healthy in nature.
All of this meant simpler ways to make payments, secured transaction without asking the customer to provide card at the site of making payment or entering Card details on a website or an app. And in some cases direct bank to bank transfers. This also made payments super fast both in terms of remittance and reconciliations. For you and me – in the city life – it might sound ordinary because there has been regular and organic acceptance of the online payments. But if you expand the horizon a little – it makes it easy to include more citizens in the ambit of financial system, provide subsidies and convenience without any leakage or discrepancy directly to consumer accounts.
Imagine a weaver who is weaving Kashmiri handicrafts or shawls at a far off village in Srinagar and wants to sell them online (means there is a need to collect payments online) or a businessman sitting at heart of Jammu wants to expand the business to geographies other than Jammu (a need to have efficient money collection in place). What if a medical tourist has to make bill payments at Narayana Hospital at SMVDU and is done with the cash he was carrying? Or pilgrims paying at the devasthal? The major risk is that of carrying extra cash or in business what if payments are not realised and the product is delivered. Online payments take away all these challenges. This changes the lives of so many common folks who would want to level up. And cascade this to a whole state (other than major cities) and to a nation – a manual system will not be scalable enough.
This brings millions of Indians into a formal economy, reduces the friction between consumers, businesses and other businesses to collect and accept money. Healthcare, Educational and Financial services will be more than easily available with an advanced payments infrastructure in place. And the government services will be delivered in a more transparent, accountable and leakage free model. Then, what’s the challenge?
Increased adoption of making payments online. If you are wondering how do you keep a check on regular spend. There are apps that can do that for you without any loss of data or security breach. But this makes you, me and the society as a whole more efficient with our spends. While it brings ease to us to make payments, it is going to considerably put a check on misuse of taxpayer’s money in the last. But tomorrow when we walk the aisle of The Smart City, we would understand that how important it is for cities to have a smooth, hassle-free payment ecosystem in place. Now we know what is the way forward – the online payments!
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