Cashless payments have taken off in India faster than any other country in the world. But American financial services giant Mastercard believes that the opportunity is only about to get bigger.
In an interview with ET, Mastercard CEO Ajay Banga said that only about 5-6 Mn merchants in India accept card payments in India, but this is a big jump since 2016, when only 1 Mn merchants accepted card payments. However, there are 65 Mn merchants in India and the scope for expansion is huge, Banga elaborated.
“[We] do expect digital payments in India to grow substantially more than in the past 10 years,” Banga added.
In response to a question about cash usage still being relatively high despite demonetisation in 2016, Banga said that for reduced cash flow at a personal consumption level, many things have to fall into place, such as fintech infrastructure, easier ways to connect with money and acceptance infrastructure across the merchant ecosystem.
In order to ensure this, Mastercard claims to be working closely with the traders’ associations such as Confederation of All India Traders, which has more than 65 Mn merchants as members. Banga also noted that the Indian government is also boosting digital payments infrastructure in the rural areas.
“Won’t tell you the answer for the percentage reduction of cash as against digital payments. I have not seen that happen over a decade in any country in the world. You can look at countries where cash is a very small percentage of personal consumption. Countries like the US still have 40-50% transactions in cash,” Banga added.
Banga believes that the Reserve Bank of India (RBI) is the best regulator in the world. The Mastercard CEO noted that RBI as a regulator has been very fair and transparent. Moreover, Mastercard has been in talks with the apex bank in regards to data predictability and enabling payments directly from a bank account using Mastercard’s pay-by-account facility.
As per RBI’s data, the user interest in digital payments has been small but significant. The use of prepaid payment instruments (PPI) such as wallets and payment accounts has increased by 33% to 4.6 Bn transactions in financial year 2018-19 from 3.45 Bn transactions in FY 2017-18. In terms of value, PPIs grew by 50%, amounting to INR 2128.76 Bn from INR 1416.34 Bn in the financial year 2018.