Digital India

A Partnership between the Confederation of All India Traders (CAIT) and MasterCard
A Vision for “Digital India”

The Honourable Prime Minister Narendra Modi announced the launch of the “Digital India” program on August 20, 2014. The program aims to transform India into a digitally empowered society and knowledge economy. It will do so by providing digital infrastructure to every citizen and ensuring that the transformative potential of technology is harnessed to improve livelihoods by upgrading the economy.

Small businesses and traders are the backbones of the Indian economy. The 57.7 million small business enterprises and traders account for 45% of India’s GDP and employ 460 million people, far ahead of any other sector in the economy.1 The sector stands to benefit hugely from digitization and the transition to a knowledge economy. Nowhere is this benefit clearer than in the field of electronic payments. Organizations including the Government of India, World Bank and the United Nations Development Program have recognized the commercial and developmental benefits of transitioning towards electronic payments, and supporting financial inclusion in the process.

However, so far, much of the trading community stands outside this revolution. As things stand:  Only 4% of transactions in India are conducted via digital payments systems.

Traders’ participation in India’s digital future

At MasterCard, we share the government’s vision for a digital India and digital payments. Our products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient.

A shift towards electronic payments is already underway and traders stand to benefit substantially if they can capitalize on the opportunities this transition offers:

The digitization of payments will make transactions more secure for merchants. Physical cash is frequently stolen, lost or soiled. Electronic payments, in contrast, are processed instantly and at zero risk to merchants (banks bear these risks).

Electronic payments can also help merchants to increase their ticket value. Research has demonstrated time and again that consumers tend to spend more on purchases made with cards than they would with cash.

Digital payments also create an instant payment trail for merchants, making it easier to track and record transactions, as well as less prone to fraud.

Electronic payments are also an effective way to promote customer loyalty. Merchants can work together with MasterCard to establish programs and offers for consumers based on the kinds of detailed sector reports and analytics we can generate using data from transactions using MasterCard. Using this data, merchants can tailor their offers and their business strategies to consumer preferences.
The young population of the country gives preference to advanced and innovative technologies over traditional systems of buying and selling. Union Home Minister Rajnath Singh, while speaking on the occasion of World Population Day 2014, mentioned that every third person is young in the country and ‘Investing in Young People in India’ is the best way to develop the competitive advantage of the country. MasterCard can partner with traders to provide technology to adapt to the changing landscape of digital commerce.

A partnership to make this vision a reality

We believe that, in partnership, MasterCard and CAIT can help deliver these significant benefits to traders and – in doing so – to help make Digital India a reality. As such, we invite CAIT to partner with us in training and partnering with merchants, working on collaborative outreach and advocacy to the Government which will help us together to harness the potential of electronic payments, to support the inclusion of digitization in enabling commerce.

We would like to propose a partnership for the duration of 1 year and to include:

Elements of the Partnership

We have already held Master Your Card seminars at New Delhi, Mumbai, Pune, Bangalore, Ahmedabad & Kolkata.

We plan to hold similar seminars in many cities of different states, the road map of which shall be decided & declared very soon.

Delivery: Through the course of the year, offering a series of trainings and educational sessions for merchants through CAIT, informing them about the benefits of electronic payments and how best to leverage them as a tool in growing their businesses. This will include a Master Your Card session as well. In addition MasterCard would request to be invited as speaker/ participant at other CAIT events as deemed appropriate to the content and discussion.

Geographic scope: A series of trainings and seminars to be offered in 5-6 promising locations across the country. In the first year we would suggest conducting these trainings in 3 Metros and 3 Non- Metros

Publicity: MasterCard and CAIT would work together to publicize these events using communications tools such as authored articles, electronic media discussions and op-ed opportunities.

Government Advocacy: CAIT will work with MasterCard to jointly develop a discussion paper to submit to the Government (Finance/ Commerce/ PMO) on how to incentivize digital payments to increase adoption. We could also work on a case study to submit to the government conducted at a pilot location.

Merely 4% of all transactions are conducted digitally and rest all transactions in cash and cheques . It is wrong conceived notion that Cash is free. Th e huge cost of paper & printing of currency amounts to nearly Rs. 20 thousand crores per annum . Beside millions of hours spending on obtaining cash payments and subsequent risk & security also involve in it. Th e digital payments landscape is limited but still emerging. Only 600 thousand accept digital payments currently. Th e Government needs to bring a support policy to equip the sector with technology.

Out of over 500 million debit cards about 95% are used at ATMs for withdrawing cash rather than at the point of sale. Considering just currency, the ratio of currency to GDP in India (12.2%) is higher than countries such as Russia (11.9%), Brazil (4.1%) and Mexico (5.7. As per report titled ” The Cost of Cash in India”, electronic transactions increased from 1.2 billion in 2011-12 to 1.7 billion in 2012-13, a growth of 36% and the total value of electronic transactions increased from Rs.967.52 trillion to Rs.1212.37 trillion over the same period, a growth of 25.31%.