MUMBAI: New research from Kantar has revealed that both Indian retailers and consumers are moving toward digital payments in the post-demonetisation era, particularly for food purchases and transportation.
In Kantar's survey of Indian retailers, more than 60% of respondents expressed an intention to accept more digital payments in the demonetisation era, with POS machines and e-wallets topping the list of preferred modes.
Though cash remains king in India – pre-demonetisation, more than 90% of outlets did not have a medium to collect payments electronically – the move indicates that the government's intention for a more digitised economy is beginning to take hold.(For more about Kantar's findings, read Warc's report: Financial services trends in post-demonetisation India.)
Survey data also indicated that Indian consumers are most likely to switch to digital payments for the purchase of groceries, meals out and transportation, such as flights or cab fares.
However, consumption of luxury goods and big ticket durables will shrink in the short term until consumers get used to making digital payments.
Kantar anticipates that the shrinking of shadow economy, large-scale removal of cash from the market and the dampener on the real estate sector will have a negative impact in the medium to long term, particularly in the luxury goods, luxury cars, SUVs, gems, jewellery and gold sectors.
Meanwhile, increased usage of cards and digital modes of payments is creating a new credit history for most Indians where previously none existed.
And the availability of credit scores will make more Indians eligible for credit from the formal financial system, both in their individual and business capacities.
Kantar added that increased digital payments will ensure liquidity remains in the banking system, enhancing the available funds for lending.
Data sourced from Warc