To move towards digital payments, the focus must not be on behaviourial change. It is also a question of changing values
After demonetisation, there are a few people, including shopkeepers, who have refused to introduce digital payment options. And for those who have introduced, it is definitely not their preferred choice. They would rather give additional cash discounts than accept payment the digital way.
In the pre-demonetisation phase, shopkeepers were quick to do brisk over-the-counter sales — all in cash. Post-demonetisation, their sales have plummeted and are slow to recover. But they remain unmoved.
Admittedly, they enjoy some advantage of location and limited competition. Still, if this can happen in a somewhat upmarket shopping complex in a metro city, imagine the situation in smaller towns and cities. What could explain their reluctance to whole-heartedly embrace digital payment optionsIJ
Can digital illiteracy explain some of this behaviorIJ Digital illiteracy is a major barrier for those with a mental block, who, in my view, constitute a minority. But not for others, as most people already use cell phones, even smart phones, and have bank accounts too.
Further, learning and using digital technology is not demanding; nor is putting the basic infrastructure in place. Any new learning that is needed can be easily acquired through peers and enablers.
Using digital payment technology a few times is all that is needed to get accustomed to it. It is really that simple. But digital illiteracy is certainly not the factor with the shopkeepers.
Could they be ‘fence sitters’IJ Some of them must be adopting ‘wait and watch’ strategy before deciding on whether or not to switch over to digital payments. They believe that demonetisation and the current push to digital payment system is just a passing phase.
When they could thrive even without the use of credit/debit cards and even with the arrival of big shopping malls, not too far from their locations, they think they can withstand the ‘digital tsunami’ too.
They believe that the convenience that paper currency provides, to both buyers and sellers, cannot be replaced by another other mode of transaction. It is only a matter of time, in their view, before their cash sales bounces back to pre-demonetisation level. While this could be the reason behind the slow acceptance by some shopkeepers, there is more to the story.
Are they avoiding some risksIJ I suspect this to be the reason. let me explain this. Sales and income of some of these stores has been quite significant. And what they have disclosed to the tax authorities in the past is only a small percentage of what they actually earn.
They, therefore, belong to the league of black money holders. Such shopkeepers are of the view that by switching over to digital transactions their ‘true’ sales/income will get revealed.
Some of them may be fine with the idea of reporting ‘true’ sales/income going forward, but they fear that the tax authorities may haunt them for underreporting of sales/income in the past.
They can be easily spotted by the tax authorities from a sharp spike in their sales/income after a switchover to digital modes of transactions, which can land them in trouble. Then there are others who are refusing to go the digital way just because they don’t want to get their ‘true’ sales/income revealed at all.
To promote digital transactions in the country, the Government has come up with several measures such as giving financial incentives to consumers to use digital transactions as well as incentives to district administrations to reach out to the general public and have them shifted to cashless payments.
Similarly, the Government is making efforts to generate digital awareness and is also making the public literate in digital transactions. While all this is much required, the Government needs to think about the issue of promoting digital transactions holistically.
Getting the public move to the digital payment system is not just a simple issue of behaviour change through awareness and literacy. It is also a question of changing values and beliefs of the people who have avoided paying taxes for years!
(The writer is a development economist)