Demonetisation and merchants

At the transactional or operational level, demonetisation has created a huge pool of retail deposits as well as increased the use of digital channels like mobile wallets, the internet, conventional channels like cards and cheques across all segments of customers: the well-served, under-served as well as un-served segments.

At a more strategic level, it has driven awareness, therefore creating a huge impetus towards banking more particularly digital adoption by influencing customer behaviour. Now that there exists a 'new normal' financial services players who are likely to fast track their digital plans to fulfill the unmet needs of customers.

Even as we were slowly but surely evolving towards a less-cash society, we have now been dramatically propelled toward becoming a digital economy as well. The likely integration of the digital/social identity with the financial identity of an individual will provide a unique opportunity to understand individual needs, aspirations as well as creditworthiness. Given the current levels of underpenetration in financial services, this opens huge growth opportunities for the sector through price and service differentiation, improved customer understanding, customer choices and focus on volumes over margins.

Developing a robust merchant ecosystem is paramount to creating a digital highway in influencing customer adoption and driving customer experience and engagement. While Person-to-Merchants payments dominate the digital space, we believe that acceleration of digital adoption by micro and small merchants is a key success factor in the realization of the vision of a less-cash society.

In this paper, we present key findings around the change in merchant behaviour, along with insights on how their outlook and adoption of digital payments is likely to evolve over the near future.