Merchants in India are no longer reliant on a cash-only business model. Young and internet-savvy consumers are giving a major push to a wide array of digital payments. According to recent reports, digital payments in the country have increased two-fold, from 25 billion in FY 2020 to 63 billion in FY 2022. It is further expected to reach 214 billion by FY 2026.
When it comes to real-time digital payments, India is the global leader. Except for large corporate transactions, two out of every five transactions are currently digital, and by 2026, it’s predicted that this number will rise to two out of every three transactions. Digital payments enable businesses to make payments for goods and services electronically by using a mobile phone, internet, and other widely available access points rather than using cash. In fact, MSMEs make 72% of their payments online and 28% in cash.
Additionally, digital payments facilitate record keeping and improve transparency, creating an easily traceable electronic trail to reduce document-related fraud. Business owners no longer have to worry about errors or missing information in payment records. Integrated digital payments also help provide payment details to customers before they make payments and avoid confusion. From keeping real-time track of transactions to making immediate payments, the adoption of digital payments by businesses contributes significantly to their growth. It helps manage streamline operations and enhances financial management. Now, let’s look at the key aspects of digital payments that accelerate business growth:
- Availability of multiple payment modes
Multiple payment options like credit cards, debit cards, and net banking have helped businesses maximize conversions. It has enabled businesses to appeal to a broader demographic, reduce cart abandonment, and provide customers with a simple and efficient checkout process.
- Minimized operational cost
For businesses to survive, they constantly need to focus on reducing operational costs. By introducing efficient management, cashless payments have made it easier and simpler to manage workloads and carry out tedious tasks. It also improves productivity.
The adoption of digital payments has eliminated the number of administrative responsibilities, one of which is keeping track of cash flow.
- Optimized vendor payouts
Digital payments have made payments to OEMs, suppliers, and distributors—in other words, payments connected to supply chain management—extremely feasible. In addition, on-time payments to business partners are helping small-scale businesses grow and scale.
- Supporting infrastructure with access to capital
Digital payments have made it affordable for businesses to connect with banks and access capital. It supports business operations with easy access to savings accounts and loans.
- Need not carry their hard-earned money home
With the digitization of payments, business owners can now stop worrying about the safety of their hard-earned money. They no longer have to take their cash home for safety. Digital payments have made receiving as well as sending much easier.
For those starting a business, digital payments can speed up registration and reduce transfer time on payments for business licenses and permits. Access to digital platforms can improve eCommerce participation as well as enhance supply-chain management and interactions with vendors.
(The author is Rohit Katyal- Group Head Business at Easebuzz, and the views expressed in this article are his own)
