Post Demonetization 'Going Cashless' Retailers & Kirana Stores Inclined for Digital India, IIMB, CDFI, IFMR research
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Post Demonetization ‘Going Cashless’, Retailers & Kirana Stores Inclined for Digital India

A significant new study has found that 63% of retailers in the countryside may now be inclined to use the cashless system of payment. The study reports a marked jump in the number of rural consumers willing to use mobile payments, post demonetization, on par with their urban counterparts. In locations with moderate consumption levels, there is also a significant increase in shops that are prepared to pay a transaction charge in excess of 1%.

Titled “Going Cashless?”, the research report covering perceptions, usage, and behavior, toward digital payments, pre and post demonetization, was conducted by the Centre for Digital Financial Inclusion (CDFI) at the Institute for Financial Management & Research (IFMR) in collaboration with researchers at Digital Innovation Lab, IIM Bangalore. The report was released at the IIMB campus at an event in Bangalore today, a year after demonetization.

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Prof. G. Raghuram, Director, IIM Bangalore, described the research report as a useful and timely one. “The focus areas now should be on the challenges, such as awareness creation and literacy. The other areas needing attention are issues surrounding infrastructure and connectivity. I hope all this has policy implications,” he said.

“There is a huge untapped potential for mobile payments at unorganized Kirana stores, where most Indians go to fulfill their daily needs,” said Krishnan Dharmarajan, Executive Director, CDFI. “A huge chunk of 94% of shopkeepers have Mobile Phones, of which 41% were Smartphones at the time of the March 2017 study. The recent influx of low-cost Smartphones bundled with Internet should further push the surging interest in digital payments across both rural and urban India.”

Prof. D Krishna Sundar, Chairperson, Digital Innovation Lab, IIMB, said: “In order to reach closer to a “cashless economy”, it is important that the number of digital transactions increases across the country amongst all segments and through a variety of payment options. Since one of the main contributors to economic activity and the current cash-based economy is the unorganized retail sector, this is a segment which cannot be ignored in the cashless journey and our study highlights that there are promising opportunities.”

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The “Going Cashless” report is a spin-off of an ongoing academic study conducted by CDFI, Institute of Financial Management and Research, and the Digital Innovation lab, IIMB on the various factors shaping usage of cash and digital payments amongst consumers and Kirana retailers. This study also highlights the key challenges and opportunities to create an inclusive enabling environment for digital transactions across the country.

A short film, detailing the making of the report, was aired after the launch. Rupesh Kumar, Head – Digital Payments, ICICI, provided a banker’s perspective, and G S Sastry, Partner, PwC, gave an overview of the impact of digitization on Indian supply chain. Dr. Shashank Garg, Principal Architect, DI Lab, IIMB, delivered the vote of thanks.

The “Going Cashless” study was done in two stages – pre-demonetisation (September 2016) and post demonetization (Feb-March 2017) with the sample of consumers and retailers from 11 districts across India.

Going Cashless Kirana stores & small retailers hold key, says new report based on research by IIMB and CDFI

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Centre for Digital Financial Inclusion (CDFI) at the Institute for Financial Management and Research, focuses on research and innovation to open doors for the poor to the financial mainstream. To make this happen, the Centre has developed innovative solutions to improve the design and drive faster rollout of large benefit programs. Amongst its various projects, the Centre is piloting a digital solution for Anganwadis. The Centre is also piloting an integrated cashless digital platform for farmer producer organizations (FPOs). The Centre has also supported mobile based continuous literacy tools for deepening digital, financial and domain literacy.

About Digital Innovation Lab at IIMB

The Digital Innovation Lab (DI Lab) is an advanced hub for research and innovation at the Indian Institute of Management Bangalore (IIMB). As a joint collaboration of CDFI and IIMB, it works in the areas of financial inclusion, public health, and education. The philosophy of the Lab is to use innovation in technology-enabled products and services to facilitate inclusion at the base of the pyramid in the digital age. Indian Institute of Management Bangalore is a leading research-focused business school in Asia.

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