Mobile ownership among women is still low, said Jatinder Handoo, chief executive officer (CEO) of the Digital Lenders Association of India (DLAI) on Monday.

Talking to Business Standard’s banking editor, Manojit Saha, at the Business Standard BFSI Insight Summit 2023 in Mumbai, Handoo said that “a large part of Bharat lives in rural areas, and 50 per cent of our populations are women. I spent a lot of time in microfinance, and there I came to know that many women did not have access to phones. Even if they did have access, it was through their son or another male family member.”

“In addition, a significant number of frauds occur in rural areas. If a fraud or even a failed transaction occurs even once, it gives a very bad name to a first-timer in the digital payments space,” he said.

Is cash still king?

On whether cash is still king, Kalyan Kumar, executive director of Punjab National Bank (PNB), stated, “In several places, cash is still king. The first factor is cultural preference. Second, there is a limitation in infrastructure. The third reason is that cash is considered secure.”

Kumar further said that building trust is critical for increasing digital payments. “The main reason, I believe, that digital payments have not achieved their full potential is that trust needs to be built.”

Growth of digital payments

Speaking of the growth of digital payments in India, Vishwas Patel, joint managing director at Infibeam Avenues, said, “The secular trend was already set from 2010 onwards. There were 350 million people who considered themselves to be middle-class, which is now expected to rise to 460 million by 2025. The Jio effect, together with 5G growth, government incentives, Aadhar and ONDC, have all contributed to the growth of digital payments.”

How did online transaction cos come into play?

Arif Khan, chief innovation officer at Razorpay, said that if one looks back in time, using the Unified Payments Interface (UPI) as an example, one cannot forget that somewhere around 2010, India embarked under digital identity in the form of Aadhaar.

“It’s one of the simplest building blocks on the identity you can witness, and by 2015, it was close to half a billion, and during that time, the thought process of building blocks of digital public infrastructure came into the mindset. We started thinking of it not just from a technical point of view but also from a philosophical point of view, which helped,” said Khan.

“There were few other things that helped the ecosystem. For example, India from 2010 to 2016, with the Jan Dhan Yojana accelerated from 20 per cent bank penetration to maybe 80 per cent bank penetration. Typically, what would have taken us three decades got compressed to maybe half a decade. With that came the Jio revolution, and then in 2016, we had demonetisation, and all of these things came together, and because it was looked at from the DPI point of view, the private-public partnership became more simpler and easier. Based on that, companies like GooglePay, Razorpay really started coming into play and that’s what has brought it to 10 billion now,” he added.

How will digital payments improve further?

Speaking of the variables that will aid in the growth of digital payments, Google Pay’s director of product management Sharath Bulusu, said, “If we are looking at the next phase of growth, there are a number of things to consider. I don’t think by any means the story on inclusion is done yet. Despite the impressive numbers, there are still a large number of users who are not included in digital payments. We still have to worry about people who don’t have smartphones. We still have to worry about social and cultural factors that drive consumers away from digital products, much alone banking. And this will necessitate not only thinking about how society is changing, but also acting on it.”

“The second factor is that for anything to scale at this size, and with India’s economics being what they are, which is very high scale, there are still areas of great friction etc, it is critical that this industry as a whole becomes self-sustaining. And sustainability economically is going to matter a lot,” he said.

“The third factor to consider is that most of the growth that we’ve seen driven in digital payments now has come out of people paying out of their bank accounts, but the same thing has not yet touched credit,” he added.