Sadie Keljikian, Stern Corporate Services

Indian consumers typically don’t spend large amounts at once, so cash has long-since been the most popular and sensible payment method for day-to-day purchases. Several tech firms, however, are trying to change that.

In the last few years, consumers in China and the US have been using digital payment services in increasing amounts. Software like Apple Pay, Venmo and many others have made online and mobile payment one of the most prevalent technology trends, since it allows consumers to purchase items and pay for services using one method. The trend is spreading worldwide and tech firms are tapping the Indian market as the next hot location to sell digital currency exchange. Unfortunately, it looks like many Indian consumers are reluctant to stop using cash for all their purchases.

Indian citizens generally spend small amounts at a time on transactions like adding minutes or data to phone plans, since nearly everyone there uses a prepaid plan. Business owners in the industry feel that consumers are unlikely to suddenly choose digital payment over cash, especially since day-to-day transactions are typically in such small amounts, but the numbers say otherwise. Despite significant consumer resistance, the largest current digital payment service in India, Paytm, currently has 302 million open accounts and 90 million active users. Those numbers continue to grow, with overall transactions using the Unified Payment Interface, or UPI reaching $2.1 billion last month.

A fair bit of resistance also stems from the controversy surrounding Prime Minister Modi’s ban on 500 and 1,000-rupee notes. The currency ban was implemented in the fall of 2016 and was an attempt to control India’s high rates of tax evasion and corruption. Unfortunately, removing the notes from circulation threw the economy for a loop and angered citizens. The ban’s primary objective was to encourage citizens to keep their money in the bank, where it can be more effectively monitored and used to stimulate the national economy.

Another roadblock keeping Paytm from further popularity is the fact that until recently, the app was only available in English. India has three national languages (one of which is English) and about 20 more common tongues across the country and though many citizens speak English, many do not. Paytm has recently begun to offer service in Hindi, but many Indian consumers are reluctant to trust payment apps with their sensitive financial information.

Only time will tell if consumer resistance and technical issues will resolve to allow digital payments and thorough taxation to permeate India’s economy.

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