Rural India — Transacting Digitally: No More A Rare Scenario Nowadays
The rural belt of India is slowly moving out from cash dependency and embracing digital transactions just like the urban parts. The transaction preferences of rural people are changing gradually. Thanks to the Reserve Bank of India (RBI) for the outstanding announcements and schemes that boost digital payments in these parts. Some of these schemes are:
- Rs 345-crore Payments Infrastructure Development Fund (PIDF)
- Har Payment Digital Mission
- Bharat Net Project
- Pradhan Mantri Jan Dhan Yojana (PMJDY)
- Direct Benefit Transfer (DBT)
- Atal Pension Yojana, and many more
The Initial Road-Blockers
It was initially challenging to make rural India digital payment-enabled as almost 70% of India falls under the rural region, and 65% of the Indian population resides here.
In addition to this size and population, the other issues were:
- Lack of bank account
- Massive number of inactive bank accounts
- Excessive cash dependency
- Poor infrastructure of banks
- Service charges
- Less accessibility to the branches
- Low income
- Illegibility to understand the bank policies
- Digital literacy gap
- Lack of trust in technology
- Unavailability of smartphone
- Network issues
However, these road-blockers failed to block the road longer — digital literacy made its path, and people of rural India are now getting used to online transactions.
Smartphones and Internet — Bridging The Digital Knowledge Gap
The rural people lacked knowledge about digital transactions mainly because they could not access Google for anything and everything like the urban people. But things soon changed, and digital literacy made its way into rural India through smartphones and smoother internet connections. Deloitte predicts that in 2022–2025, the demand for smartphones and internet connections in rural areas will be the highest.
It is believed that almost a total of 1.7 billion smartphones will be shipped to India by 2026, mainly to meet the rural population’s needs. It will take India’s smartphone market worth $250 billion. So, rural India is going to have the next wave of digitalization.
Now, moving on to internet usage growth, the number of internet users grew by almost 13% in the rural area, which estimated the number around 299 million. Forbes reports that the internet presence of rural India is now 20% higher than its urban side. It clarifies why and how rural India is getting ready to welcome digital payments lately.
Digital Payments Popped Up
Rural India was solely cash-driven even when urban India had accepted and started using online payments. Lack of knowledge created a lack of awareness there, but everything changed as soon as smartphones and the internet entered the scene. A 2022 report shows online transactions surged 650% in semi-urban and rural areas.
The customers and merchants gradually realized the convenience that online transactions brought:
– No need to carry cash
– No need to maintain khatabook
– No need to return changes
It removed their cash dependencies and made the customers used to with “scan and pay”
Fintech Sector — Showing Newer Possibilities to the Rural Merchants
The fintech companies of India realized that it is their responsibility to make the Indians aware of digital payment and offer them ease of it. So, along with government and semi-government sectors, many private companies came forward to spread awareness.
In order to welcome a cashless economy in India, rural inclusion was a must, and rural people barely trusted any of these sectors.
So, How did the Problem Get Resolved?
Whoever came to spread awareness realized that being legible is very important to win the trust of rural people. Even after they can easily access Google with internet-enabled smartphones, a handful of materials are illegible due to the language barrier. It was the very first pain point they addressed. The representatives from government and private companies visited the villages in person and demonstrated how online payments work in the local language.
The UPI apps and official apps of the banks started coming in multi-language features. More how-to videos and help documents came in local languages so that people could understand these without putting much effort. Awareness campaigns started becoming successful as people came forward and cleared their doubts without hesitation. The apps released the latest versions where unnecessary complications got removed.
Payment gateways extended their hands, as well, to show the growth opportunities to the rural merchants. These gateways encouraged start-ups to come forward and experience effortless business management through the mobile app. In other words, rural merchants can now dream of going global and offering an aesthetically pleasing experience to their buyers with a payment gateway.
To sum up, a growing internet penetration, Smartphone usage, and of course, awareness campaigns worked in favor of digital payments. It created an environment for online transactions in rural areas.
The merchants got the safety and multiple payment modes to offer the customers through the payment gateway. The end customers got the easiest payment method. In short, they finally understood the ease online payments bring for daily transactions.
As a result of increasing awareness, 25% demand increased for micro ATMs and mPOS instruments. The number and volume of transactions increased as well. The government of India has also invested almost INR 65 crore to promote digital payment services like IMPS, UPI, PoS machines, etc.
Digital transaction is highly visible in rural Kirana stores, medical stores, mobile stores, etc. We expect they will opt for digital payments for gas booking, electricity bills, tax, etc., in future.
End words
Rural India is an integral part of India; hence, it should get the convenience of online payment like the urban part. The conservative mindset of rural people delayed this convenience. Now, the government, semi-government, and private sectors know how to convince this rural population for digital payments and lead India toward a cashless economy.
