How can fintech companies solidify the payment infrastructure in rural India?
By Praveen Paulose
The payment infrastructure in India has undergone several transformations over the past decades. This has been mostly due to the advent, influence, and ever evolving nature of technology which has digitized much of the infrastructure that we see today. The payment infrastructure in the industry is today characterized by many good qualities that we as customers enjoy. From speed, to convenience, to accessibility, the overall system has become one of great pleasure to use. And as technology and the internet continue to evolve, this will only get better.
Challenges Faced by Rural India
The rural population in India has unfortunately not witnessed the same transformations in the payment infrastructure and continues to face several challenges even today. This starts with the lack of a solid foundation of the internet, which continues to be something that not everyone has access to. The absence of the internet means that people cannot use digital payment tools, the way people in urban areas are able to with such ease. Adding to this, while much of the rural population is equipped with a mobile phone, a significant portion do not use smartphones. This restricts their access to many services that require a smartphone as a prerequisite, thereby greatly cutting down on the scope of services they can use for their financial operations.
Together, these problems contribute to the low digital literacy in rural India. This means that many still lack the necessary skills, knowledge, resources, and help to use digital tools for their financial needs. Coinciding with the difficulties faced to the underdeveloped digital infrastructure is the continued heavy reliance on physical cash to make payments and carry out different financial activities. This is attributed to the deep-rooted beliefs, thought processes, and habits of the rural population, which persists to this day.
These are but some of the prominent challenges that plague payment infrastructure in rural areas, preventing people from being able to enjoy the same proficiency in services as their urban counterparts. In an effort to solve this, Fintech companies have undertaken several efforts towards solidifying the payments infrastructure in rural India.
Steady Approach to Solidify Payment Infrastructure in Rural India
Fintech companies have steadily introduced digital payment methods in phones beyond smartphones, enabling the accessibility of basic services on the mobile phones that are used by the large chunk of the rural population. This has steadily gained traction with people living in rural areas, thanks to the compatibility of the software-based services, the user-friendly nature of the applications, as well as the availability of these solutions in different native languages.
Furthermore, fintech companies have also collaborated with local businesses with the ability to carry out cashless transactions for different financial products and services. They have also been leveraging technological tools and identity documents such as Aadhaar to fortify the security associated with financial services associated with crucial information. This gives people the much needed trust, gradually nudging them towards digital services with the complete assurance that their data is safe throughout. Linking bank details with Aadhaar numbers has also helped streamline many processes. One such example is Know Your Customer (KYC). This greatly simplifies the enrollment process of customers who can be inducted into different Fintech services. This also gives them easy access to the different financial benefits connected with government schemes that can be availed much faster as well.
Some Fintech companies have also introduced agent banking, in recognizing the need for human elements in the different financial processes that people in rural areas seek. Agent banking includes developing intermediaries who assist villagers in different activities, thereby helping facilitate the different processes that the rural population undertakes.
The solidification of the payment infrastructure in rural India is a massive undertaking that requires continuous and proactive efforts from Fintech companies to empower large sections of the population that are underserved. This will further strengthen the industry, economy, and most importantly – citizens of a thriving country that continues to climb the ladders of financial prosperity.
(The author is Praveen Paulose, MD & CEO, Celusion Technologies, and the views expressed in this article are his own)
