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10 January
2017
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Cashless (The Total Investment & Insurance
Solutions)
Since
demonetisation, about 15% of cash-based transactions have moved to digital,
reveals a primary survey conducted by State Bank of India (SBI). "This
means that Rs25,000 crore of cash-based transactions have moved to digital in
the last two months. If this is so, this is a good beginning," says SBI in
its Ecowrap report. The Total Investment
& Insurance Solutions
SBI
conducted a survey in Mumbai and Pune among different formal and informal
business groups to ascertain the effects of demonetisation on their daily business
and whether this move has resulted in increase in digital modes of payments. A
total of 175 responses were recorded and analysed, of which 40% respondents
were from premier business locations of Mumbai and remaining 60% were from Pune
and nearby areas. The Total Investment
& Insurance Solutions
SBI found
that merchants are facing certain challenges like non- or less availability of
point of sales (PoS) machines and lack of training and knowledge and lack of
trust. Although banks have supplied more than one lakh PoS terminals since
demonetisation the supply is still low compared to high demand.
"We
would suggest that the Government should thus build incentives for the Banks
investing in creation of card acceptance infrastructure by deploying PoS
terminals and creating acceptance points. We would suggest the Government to
very quickly on-board new merchants, particularly small and marginal traders,
and grocery shops on digital platform by a more targeted approach. This could
be incentivised and the same can be met by support funds from Government. An
even better approach could be to charge the large merchants, which could be
used to cross subsidize the small merchants. It could be a sustainable model,
otherwise new merchants need to be convinced about the uncertainty beyond March
2017," SBI says. The Total Investment
& Insurance Solutions
The results
reveal a number of interesting facts post demonetisation. The survey reveals
that 69% of the respondents did affirm that their business has been impacted.
Even then, there is an overwhelming support about 63% of the sample, towards
this move. However, the respondents were very clear that supply of only Rs2,000
denomination notes without intervening notes of Rs500 has resulted in more
chaos, the report says. The Total Investment
& Insurance Solutions
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SBI Research (The Total Investment & Insurance
Solutions)
It says the
good thing is that prevalence of digital modes of payments in chemist shops and
even in case of automobile stores has possibly resulted in only a marginal
impact on their sales.
According to
the primary survey, overall the decline in business is less than 50% for the
majority of the businesses that were impacted. Construction sector and the
informal roadside vendors seem to be the most hit with 55% and 71% respondents
saying that the business got reduced by more than 50%, SBI said.
The Survey
received varied responses from the textile and readymade garments sector and
the fast moving consumer goods (FMCG) sector. It says, "Within the textile
sector, shopkeepers dealing with retail segment have been more impacted than
those in the wholesale segment. Moreover, the wedding season has been
disappointing with sales dipping significantly compared to the last year
wedding season sales." The Total Investment
& Insurance Solutions
SBI says
about 41% sellers already had PoS machines available even before 8 November
2016 but their usage has seen an increase only post demonetisation, in fact,
15% moved to electronic payments, viz. m-wallets, PoS in the ensuing weeks. The Total Investment & Insurance
Solutions
"This
means that Rs25,000 crore of cash based transactions has moved to digital in
the last 2 months. This number could have been even higher because the
behavioural shift has not happened yet and many merchants still prefer cash
transactions when the transaction amount is not large. So they are mostly
discouraging people to use PoS for small transaction value of say less than
Rs200 or so. Also, a number of merchants are facing connectivity issue at PoS
machines," SBI says.
Recently,
RBI has revised the per month limits on mobile wallets spend to Rs20,000 for
users and to Rs50,000 for merchant bank transfers. However, given the quantum
jump in digital wallets usage in recent days, SBI feels that RBI should enhance
the user limits further to make it easier for both users and merchants to shift
more of their cash transactions to digital wallets.The Total Investment & Insurance Solutions
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