India’s BQ: Freedom From Cash, By Visa’s TR Ramachandran
This is a series of articles by leaders on how India can raise its Business Quotient.
While the Indian economy has all the ingredients to grow into a superpower, are we collectively ready as a nation to leapfrog into an inclusive future?
The India we know is changing. It is transforming into a transparent nation. As over 1.3 billion Indians celebrated their 71st independence, the nation is on the cusp of a big digital transformation. With massive urbanisation, next generation technologies, better infrastructure, skilled workforce, and concerted government endeavors, the country has emerged as one of the fastest-growing economies and top adopters of the digital world.
The most important aspect of India’s infrastructure is its human capital. India is projected to be the youngest country by 2020 with about half of its 1.3 billion people under the age of 25 years. This is a huge demographic dividend as the youth can propel the economy to higher growth for a long time. The growing middle class can also push India as one of the top knowledge-based economies. Adding to the impetus are several government initiatives aimed at improving education, bank accounts for all, free life insurance, wider use of computers and the internet, and up-skilling the workforce for the big boom in jobs coming up in fast-growing sectors like healthcare, information technology, telecom, and retail. As a nation, we have made rapid strides in embracing a digitally inclusive approach to development.
A recent Visa survey has identified the economic burden of the cost of cash on the Indian economy as being equivalent to 1.7 percent of gross domestic product (GDP). Naturally, businesses, consumers, and the nation stand to gain enormously from going cashless with transparent, easier, more convenient, and safer transactions. With the government’s strong resolve to evolve into a less-cash nation purged of black money, shadow economy, counterfeit currency and terror financing, the progress continues to be rapid. At an average rise of two percent per month, digital transactions are witnessing an exponential growth.
Many forward-thinking governments across the world are now incentivising the move towards digital payments. Over the past two decades, India too has pushed hard to become a less-cash society versus a cash-dependent society and embracing digital payment solutions. All over the world, the shift toward cashless payments is well underway. Consider this – Sweden is on course to become the first completely cashless economy in the world, with 98 percent of payments there made with non-cash methods. Canada has one of the highest penetrations of card-based payments in the world – over 70 percent of personal purchases in Canada are card-based and digital.
According to another Visa study, if businesses in the top 100 U.S. cities transitioned from cash to digital payments, those businesses and their cities would experience net benefits of $312 billion per year.
Businesses in New York City alone would net $6.8 billion more while saving more than 186 million hours in labour.
One can only imagine the scale of these benefits for a country of our size. The benefits of taking cheques and cash out of the system extend beyond labor cost efficiencies and include added convenience and security for consumers with reduced transaction costs for businesses.
The good news is the vision of Digital India, the flagship program of the Government of India is to promote digital commerce to spur financial inclusion at scale. Towards this end, one of our most successful attempts has been the launch and rollout of BharatQR, the world’s first interoperable QR based payment system. Since its launch earlier this year, Visa along with the Government of India and other payment solution providers has been at the forefront of driving the adoption of the low-cost digital payment solution across India.
India is at an inflection point in its digitisation journey and innovations in form factors, technology, and measures like the Bharat Bill Payment System, payments and small finance banks are all building blocks of a less-cash, financially inclusive society.
A successful case in point is our collaboration with the state government of Andhra Pradesh to help transform Vishakhapatnam into India’s first less–cash city. The unique approach to draw up a blueprint to help cities transition to less–cash societies finds synergy from the open collaboration of the real-world innovation ecosystem- city agencies, government bodies, local talent pool, agriculture markets, auto rickshaw drivers, women and small merchants – to increase adoption of digital technology and realise our goal of a less-cash India.
To transform the country into a digital nation, the entire ecosystem needs to collectively take relevant measures to transition to a transparent society. Achieving this goal would not only help reduce the size of the shadow economy in the country, and improve productivity but also lead to a significant increase in jobs. We also need to spread financial literacy, grow the infrastructure at the grassroots, energise the innovation ecosystem, and encourage adoption of new products, technologies, and platforms to bolster financial participation.
As India fast adopts digitisation, it’s also imperative to take a secure approach that relies on multiple layers of technology, analytics, data security, proven best practices, global standards, and compliance to help protect the system and reduce fraud. This will not only help drive more transparency in everything we do but also transform India into a hotbed of innovation. With the kind of historic appetite India has for freedom, the country’s transformation into a cashless society doesn’t look too far. Together, we can build an empowered India, that we have all dreamed about.
TR Ramachandran is Group Country Manager, Visa India & South Asia.
The views expressed here are those of the author’s and do not necessarily represent the views of BloombergQuint or its editorial team.