Lockdown leads to resurgence of cash as digital payments decline

The use of cash seems to be becoming more prevalent during the ongoing lockdown as smaller retail outlets, the only category of retailers open for business at present, seek payments in cash from customers.

Many of these retailers, usually the neighbourhood kirana stores, have been accepting digital modes of payments since the sudden withdrawal of high-value currency notes by the government in November 2016. Referred to as demonetisation, the event led to these shops and others joining the digital payment ecosystem.

“In my area in Powai (a Mumbai suburb), several shops do not accept digital payments citing the demand for cash from their suppliers. During the lockdown, getting cash has also become difficult as people do not want to use automated teller machines (ATMs) for want of sanitisation after each use,” said Anand Kumar Bajaj, chief executive of PayNearby, a fintech that provides AePS services, among other digital banking services.

According to Bajaj, since a retailer is selling multiple categories of products and branded/unbranded both, he does not want to get into a behavioural change by accepting digital payments from customers since some of his suppliers ask for cash.

“There are several unbranded goods being sold by kirana stores whose suppliers take only cash, while suppliers of branded goods are willing to take digital payments. Half of his suppliers want cash, the rest want digital and, in this dilemma, the retailer wants only cash from his customers. No one says no to cash,” said Bajaj.

  • Source – Mint