An article in the Hindu Business Line highlights the impressive progress India has made in deploying the infrastructure of electronic payments. By measures such as POS terminals (rising from 12.1 million in 2015 to 45.9 million in 2019) and debit cards (604 million in 2015 to 835 million in 2019), great progress is being made.
Additionally, “moving beyond just setting up full-fledged bank branches, banks have started expanding the base of alternate electronic delivery channels at a much faster pace, after mobile connectivity and network, and Internet services were made accessible and affordable to people at the bottom of the pyramid.”
Despite impressive technical progress, the challenge of growing the base of end-users is ultimately one of financial awareness and education:
In order to make FI work to ensure that the benefits of inclusion reaches the intended target group of the society, seminal changes need to be introduced in the spread of financial and digital literacy and credit counselling. While many stakeholders have been doing sporadic work, they are not coordinated enough to optimise its effectiveness.
Inadequate institutional efforts to disseminate financial awareness at the grassroots level are keeping even financially connected masses (those having bank accounts and debit cards) away from the formal financial system. Adequately equipping and empowering institutions engaged in disseminating comprehensive literacy programmes will be essential to unleash the potentiality of the huge financial and digital infrastructure built and designed to sub serve FI.
In rapidly emerging markets such as India, we often focus on the “last mile” challenge of infrastructure deployment as a limiting growth factor. However, as the article implies, the pace of deployment may exceed the ability of target populations to become actual service consumers without concurrent, intensive user campaigns to build new generations of electronic payments users.
Overview by Ken Paterson, VP, Special Projects and Director, Customer Interaction at Mercator Advisory Group