Digital Payments – Distribution


In India most of Fintech companies are riding on Digital Payments wave created by Government. The government initiative is one of the big booster for digital payments.

Every company and bank is claiming an increase of 200 to 400% increase in digital transactions. Remember 10 txn yesterday vs. 40 txns today is also 400% increase. What is universe?

Lets evaluate what is digital payment versus who is using it (Is it really leading to cashless or less-cash) ?

1. Wallets : Paytm leading the pack with wallet had created a buzz in the market with wallet (mobile wallet) to pay utility bills initially coupled with ease to pay regular small denomination payments. A great success ??? Allow me to put a point here (a) Who are users of this wallet ? The answer is simple, people who already had bank accounts. They transfer money using their bank account, credit card, debit card to use Wallets (Transferring money from one digital mode to another). (b) Why most of the people use mobile wallets ? The survey conducted in cities is 90% people use for CASH BACKS and other use for regular small payments like Uber bills.

Now the big question is, Are wallets really leading to “Digitalization of CASH” and “Banking services – Financial Inclusion” ?

2. AEPS : New buzz is AEPS. In a retail bank branch 95% transactions are of (a) Cash Deposit (b) Cash withdrawal (c) Balance Enquiry or passbook updation. Experts claiming that AEPS cash Withdrawal and Deposit is digital payments can help me understand, how this process is eliminating the cash ? AEPS through BC/ CSP network is a proxy to Branch Banking and is not about Digital Payments. Yes, AEPS – Aadhaar Pay can be viewed as Digital Payment (Buying goods or services using AEPS-Aadhaar Pay).

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3. Lets talk about much hyped BHIM/ UPI : Riding on backbone of IMPS platform, UPI and BHIM needs to reach second level of Consumer to Business payments. Small Payments are still a far distant. UPI may be a game changer when merchant payments is implemented.


Lets see distribution of Digital Transactions, JAM – 1 billion, how many unique consumers ? where they live? It is the same customer who use Wallet also use card and then move to Aadhaar Pay and then to UPI and then to other digital payments?

Are these innovations being adopted by Rural Population ? The answer currently is “NO”. The industry need to either innovation for masses and not for classes or bear the cost of reaching un-banked, under-privilege populations in villages.

My research shows two important aspects of Digital Payments, One is concern for security (due to ponzi schemes in poor states where people lost hard earned money) and second is ease to use. How can industry expect an illiterate person (please note as per Government’s definition of literate person “A person who can write his name”) use smart phone to make digital payments. As per Government data 26% of India’s population is still illiterate. Bihar being the lowest have 37% illiterates.

Sukhdeep Singh

Digital Payment & Financial Inclusion Specialist, utilizing business acumen, strategic planning to achieve set goals


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