Wednesday, April 13, 2016

Rs 23,000 Crore Electronic Payments Likely Adopters are Young Generation of Micro Merchants

A new MasterCard study of micro merchants in India indicates that young merchants in the age group of 35-45 are most likely to adopt electronic payment systems, thus furthering the country’s vision for a less cash economy.

According to the MasterCard Micro Merchant Market Sizing & Profiling Report, young merchants owning large and medium sized businesses, primarily in auto accessories, building fittings, medical, private cabs, and food & beverage sectors form the high potential segment. 

The report identifies the number of merchants most inclined to trials of e-payments at 10 percent, that is, almost 5 million of the total 59.16 million known universe of micro merchants. Merchants cited potential increase in revenue (46 percent) as a strong driver for trials, followed by increased business efficiency (31 percent) and enhanced shop image (30 percent).

Unveiling the report findings, Porush Singh, Country Corporate Officer, India and Division President, South Asia, MasterCard, said, “At MasterCard, our vision is a world beyond cash as a less-cash financial system will benefit both merchants and customers by mitigating the costs and risks associated with cash while doing business, as well as enable merchants to target new customers and markets. As India moves towards digitization, we firmly believe that the country’s young population will be the drivers of technology adoption and transformation of the payments landscape, and the MasterCard study mirrors that belief.”

The MasterCard study interviewed micro merchants across India with a view to understand the market potential, key barriers to adoption of non-cash modes of payment and opportunities for enabling a less-cash society.

The study estimates the potential market size to be more than INR 23,000 crore weekly. Merchants acknowledged safety concerns and operational concerns related to a cash-driven business, with one-third (33 percent) admitting the need for presence of self or family member at the store to avoid pilferage. More than a quarter (29 percent) also agreed that they face operational efficiency issues related to cash such as time and effort to tally expenses and profits daily, and effort required to keep record of transactions. Close to a quarter of merchants (24 percent) admit to having lost customers due to inability to accept card payments.

The report finds that merchants who are familiar with and personally own e-payment formats showed a higher willingness to consider adopting them for business (70 percent), compared to merchants who are unaware of e-payment methods (8 percent) or are aware but have never used it (14 percent). This reflects a direct co-relation between knowledge and familiarity of e-payments with willingness to adopt them, thus indicating a need to educate merchants about the benefits of adopting non-cash methods of payment.

Praveen Khandewal, Secretary General, CAIT said, "India is on the cusp of a payments revolution as this has been pursued as a key policy objective by the Modi Government. A less cash economy will benefit our constituency of around 6 crore small merchants and traders in reaching out to newer markets and as outlined in the study. Digital technologies will provide opportunities for the young generation of merchants to further grow their businesses. Through our partnership with MasterCard we have successfully been able to reach out to more than 50,000 traders and smaller businesses across eight States and intend to cover many more this year, through our joint Master Your Card trainings.”

He further added, “Along with addressing traders directly, we are also training champions promoting this cause of less cash in each of the States and are proud of the fact that these champions continue to promote this message further actively in their constituency. This is one of the key resolutions we passed at the National Traders Conclave which was held in New Delhi from April 4th -6th with more than 5000 traders in attendance.”

The study identifies young merchants (age 35-45 years), owning medium sized businesses (6 to 10 employees) and large sized businesses (11 to 20 employees), based across Delhi, Mumbai, Chennai and Bareilly as high potential segments for adopting new technology and moving to a non-cash payment system.

To promote financial awareness and literacy amongst traders, MasterCard, CAIT and HDFC joined hands last year to launch a training program ‘Master Your Card’ organising educational training sessions for Indian traders across the country. Since its inception in 2015, more than 50,000 traders have participated in trainings conducted in cities including New Delhi, Pune, Chandigarh, Jaipur, Ahmedabad and many others. Additionally, e-Lala has been launched to support brick & mortar shops to embrace e-commerce as an additional platform to generate more business.

Report Methodology and Sample Size

The MasterCard Micro Merchant Market Sizing & Profiling Report is a study of 1653 merchants across nine cities – Delhi, Kolkata, Mumbai, Chennai, Bengaluru, Bareilly, Ranchi, Nasik and Vijaywada, through face to face interactions.

The study examines micro merchants in India across verticals like kirana stores, medical stores, F&B stores, mobile phone & accessories, watches and accessories, garments, consumer Electronics, Building fittings, Automobile accessories and spare parts, Private Cab Services and Beauty Parlours/ Men's Salons/ Barber shops.

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