In last few years, India has seen a tsunami in terms of payment services, led by eCommerce websites, wallet services, digital payments and FinTech start-ups. According to a report by The Economic Times, India accounted for 14% of the total online transactions in FY2015. The major reason for this spike was the growth of e-commerce websites in the country, with retail electronic clearing accounting for 71% of the overall cashless transactions.
The already rising sector witnessed a major boost in the form of demonetisation. As the government withdrew the Rs. 500 and Rs. 1000 notes as legal tender, which had accounted for 86.7% of the currency in circulation, people had no other option but to turn to digital banking and mobile wallets.
There are many factors that indicate that 2017 might be the year when India finally becomes ready to adopt technology completely.
Better Adaptation after Demonetisation
It won’t be wrong to say that 2015 was the year of awareness for digital banking in India, 2016 witnessed better use of technology and application of innovative methods, and in 2017, since people have seen it all, they might be ready to use these services for extra convenience.
According to the data released by the Reserve Bank of India, mobile banking transactions jumped to Rs. 49,029 crores in December 2016, as compared to the previous month. An improvement of 82% was seen from the September to December period. This should clear any doubts regarding the adaptability of the Indian public to technology.
Higher Penetration of Smartphones
Smartphones are a very important tool in making mobile banking popular. The number of smartphone users is expected to reach 340.2 million by 2017 and India is expected to leave the United States behind in this regard. Better penetration means more people will have access to technology and knowledge. This will eventually increase cashless activities in the country.
Full Government Support
The dream of a cashless economy cannot be achieved without full government support and Prime Minister Narendra Modi has already made his intentions clear by urging people to use the digital mode of payment.
According to the National Federation of Urban Cooperative Banks and Credit Societies, about 2,13,000 farmers had activated mobile banking accounts by the last week of 2016 and about 81,000 farmers had started using e-wallets. This is a major milestone towards achieving the goal of cashless economy. As the word spreads, more of the rural population will begin to move to digital banking and 2017 looks like the year in which the digital platform will really take off.