WHY WE PAY HOW WE PAY?

At a grocery store

“QR hai?”

“Nahi sir, only cash or card”

“Kyun?”

“Wo account number block ho gaya hai shayad, do teen din mein ho jaayega”

I showed my discomfort as I had to do so much work, put my hand in the wallet, get the card out, swipe, enter pin and collect the charge slip which would immediately see face of dustbin lying there.

A thought crossed my mind “WHY WE PAY HOW WE PAY?, My thinking mind wanted to go to unravel this mystery.

Here is what ran in my head then:

Cash

Ah! Easy and familiar, people connect with this mode of payment, they have been paying through cash since ages, they know him, Cash has been part of the system since long, people have lovingly counted it, they have made sure that it sticks to their pockets. Why we use cash, some pointers:

1.     Most familiar mode, like a close friend

2.     Feeling of touch, see, thus more depth of relationship with cash

3.     Feeling of instant redemption, meaning task is over, be it collecting cash or giving it

4.     Only two stakeholders in transaction and closure

5.     Confidence and feeling of power when cash is in pockets

 Debit Card

There are 824.9 million debit cards in India (Source- https://www.reuters.com/article/us-india-visa/visa-critical-of-indias-move-toward-no-fee-debit-card-transactions-idUSKCN1V91RK)

After Cash, with so many numbers, it will be safe to say that next big payment mode is debit card, Why we use debit card, some pointers:

1.     Instant Debit of amount, pheww!

2.     Emotionally a feeling of expense rather than indulgence

3.     Used by people who are usually aware of their expenses and balances

4.     Feeling of security as the thought of the bank who has issued the debit card as a backbone

 Credit Card

There are 48.9 million credit cards in India (Source- https://www.reuters.com/article/us-india-visa/visa-critical-of-indias-move-toward-no-fee-debit-card-transactions-idUSKCN1V91RK)

Credit card is fundamentally spend now pay later! ( Oh! I have said nothing new, however this line plays a lot psychologically on people who use credit cards often)

1.     Used by people who usually believe more in indulgence

2.     Easy, swipe and go, the strain of paying can be delayed, it can be handled later, postpone the pain, live now!

3.     The belief that “I know how to use my money and how to use cycles of payment of credit card” leads to high usage of credit card.

4.     The belief that “I can afford anything with a credit card” is also one of the reason of use of credit card.

UPI

With an average of 1.3 billion monthly transactions in India, I must say that this is newest and exciting form of making payments, why one uses UPI:

1.     Mobile. Mobile and Mobile, it is done through mobile which is there in one’s hands/pockets always, accessibility.

2.     Instant gratification, scan the QR code or enter UPI id and done, A payment mode for more than 65 % of population which is under 35 years in India (https://en.wikipedia.org/wiki/Demographics_of_India)

3.     A feeling that “I am technologically advanced” and not orthodox

4.     Offers and cashbacks

5.     Since anyway a person has to pay, it’s a cool thing to pay via UPI (via UPI id/QR/SMS link)

6.     OTP and PIN are there, so safe!

 AePS (Aadhaar Enabled Payment System)

123 crore people hold Aadhaar card in India! (https://www.livemint.com/Politics/FFdSf7BlL42zJ9H0jt9T6O/123-crore-Aadhaar-cards-issued-to-people-Govt-tells-Rajya-S.html)

Aadhaar enabled payment system used person’s biometrics as authentication, acts as a bridge between banks and UIDAI and performs basic banking transactions like cash withdrawal, cash deposit, balance enquiry etc. amongst typically tier 3-6 towns in India.

Why people use AePS:

1.     Safety/comfort (due to individual Aadhaar authentication)

2.     Convenience (at BCs/Agents)

3.     Direct benefit transfer access

Finally

Habit forms the major reasons why we pay through a particular method but trends suggest that habits are changing fast and people are preferring digital modes of payments as it takes a lot of patience to pay via traditional methods of payments.

You will be astonished to know people are making digital payments for anything and everything these days!

We are becoming cashless economy from less cash economy!

Future is digital payments!

Stay Tuned!

Views expressed are personal.