Cashing it out: Why mobile payments are fostering the development of a cashless future

How mobile migration helps the payments industry in minimising the traditional reliance on cash

hidden May 25, 2016 15:52:17 IST
Cashing it out: Why mobile payments are fostering the development of a cashless future

By Anish Williams

There is a very high chance that the first thing that people today reach for when they wake up in the morning and the last thing that they see before they sleep is a smartphone. Most of our social and professional interactions are today often restricted to mobile-based over-the-top messenger and calling services, and mobile apps are our first go-to medium for everything from keeping abreast of the news to checking out the latest apparel. Consider the statistics for a clearer understanding of the impact of smartphones on our lifestyles. A recent survey by We Are Social reported that nearly forty-five percent of the world’s webpage views in January 2016 came from a mobile device, demonstrating an increase of nearly 21 percent over the previous year’s numbers. This growth for mobile web views came at a time when all the other mediums of accessing the internet were witnessing a decline, indicating the growth mobile-based commerce is set to receive.

These examples perfectly encapsulate how the rapid penetration of digital technology has given a new, exciting twist to the concept of basic necessities and has led to the addition of mobiles, smartphones and tabs to the list of must-haves one cannot thrive without. With a user base of nearly 2 billion and growing, the writing on the wall is clear – the world is rapidly driving towards a mobility-first approach, and smartphones are actively taking over all aspects of life. Needless to say, the global payments industry has not been left untouched by this increasingly pervasive phenomenon. But how does this mobile migration help the payments industry in minimising the traditional reliance on cash?

For that, one needs to understand the conventional hassles associated with cash-based transactions which have long troubled the society. While considered to be the best mode of transacting for a long, long time, the concept of making cash payments is fast losing ground in terms of popularity. It is very easy for a vendor to push torn notes and counterfeit currencies through cash-based transactions, while at the same time carrying large amounts of cash is also risky, as physical capital, if misplaced or stolen, is very hard to track or recover. Additional hassles such as a tangible delay in order fulfilment come to the fore when trying to send or receive physical money over long distances; while opting for the cash on delivery option when shopping online, can also often cause one to miss out on the deals and discounts that are currently in play. The result is lesser savings, greater risk and low value for money.

In comparison, mobile-based transactions score on almost every aspect by delivering greater convenience, flexibility of usage and security. Since digital wallets leverage APIs for service delivery and have elaborate and detailed anti-fraud frameworks in place, the risk that comes with using them to complete the transaction is extremely minimal. Moreover, even if one loses or misplaces one’s phone, most mobile wallets can still be accessed through a website-based interface, where the user can block his or her transactions within minutes and change the login credentials. With the advent of social wallets and community-based transactions, sending and receiving money has also become a very easy, efficient process that can be completed with the touch of a button; we can now even split our bills and meals with our social circles and push gifts to delight our families and friends through mobile wallets. These features have added greater value to the consumer transactions and are actively creating better end-user experiences, leading to the widespread adoption of mobile wallets as their primary mode of making payments. Even merchant apps like ticketing services, food delivery and med-tech are integrating easy digital payment solutions within their offerings in order to give their users the convenience, security and flexibility they seek.

But security and swifter usage is not the only thing that is driving the mass adoption of mobile wallets, which also bring in several value-added features to enhance the end-user experience. Managing expenses is much more convenient when utilising a mobile wallet, as users have complete access to their transactional history available anytime, anywhere. This helps them plan their expenditure in a much more streamlined fashion, a benefit that a cash-led approach lacks. A consumer can also avail discounts and offers on mobile wallet usage from partner merchants and derive greater value for money.

Given the benefits that using a mobile wallet have over the traditional approach of cash transactions, it is no wonder that the country’s mobile wallet users already outnumber the credit/debit card holders, while mobile-based payments are currently expected to be in the region of $1.15 billion. As smartphone penetration increases and the internet infrastructure improves, this number will go up in the future – several industry reports peg the contribution of phones and tablets to the overall digital transactions made in India to increase to 30% by the year 2020, according to tech solutions partner company Altimetrik. On the back of such massive changes, the path seems set for India to soon evolve into a truly cashless digital economy that has its foundations in the robust, secure, swift and ubiquitously integrated mobile-led payments infrastructure.

The author is CEO at Udio.

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