The unexpected global coronavirus outbreak has severely disrupted the Indian economy. The World Bank estimated the country’s economy to slow down to 5% in 2020 due to COVID-19 and projected a sharp growth deceleration in fiscal 2021 to 1.8 % in a standard scenario. The pandemic came at a time when India’s economy was already losing its pace due to tenacious financial sector weaknesses. To control the spreading of the virus, a nationwide lockdown was imposed, which created a paradigm shift in the way businesses operate and the behavior of the consumers.
As working remotely from home has become the new norm amid the virus scare, people are now being extra cautious and stepping outside only to buy essentials to avoid getting infected in crowded places like supermarkets and grocery stores. Moreover, there is a major transition from offline to online. From purchasing the daily essentials, groceries, and medicines through offline retail stores, consumers are now shifting to online aggregators. This is generating a major dependence on digital payments as users are now making transactions through their cards, UPI apps, and net banking instead of relying on cash transactions. With more and more consumers now relying on digital platforms for making their financial transactions for e-commerce, on-demand service delivery, on-demand entertainment or collaboration tools from the comfort of their homes, merchants can heave a sigh of relief and expect a lesser impact on their business during the mayhem caused by the virus outbreak.
Challenges & opportunities for merchants and small traders
Demonetization and increasing customers’ demand triggered a much-needed push to the growth of digital transactions in India. Digital payment platforms; both B2C and B2B were witnessing an upward growth even before COVID-19 hit the nation. As per a report by Reserve Bank of India (RBI), digital transactions in India registered 19.5% in value in 2018-19. This growth was predominantly driven by MSMEs and merchants leveraging technology to cater to the specific requirements of each customer. However, many merchants remained skeptical about accepting payments online due to a lack of awareness on and fear of being cheated.
The lockdown due to COVID-19 led to a public health and economic crisis of epic proportions that forced businesses across industries and sectors to experience a first-hand impact. They are now struggling with a manpower shortage, supply chain issues, unanticipated demand, and lack of cash flow. Moreover, uncertainty prevails in terms of what will happen once the lockdown is over. The availability of digital payment technologies can help the MSMEs and small merchants obtain the necessary infrastructure to tackle situations in advance and stay prepared for growth and rebuilding sooner than they can expect.
Digital payment mechanisms ensuring uninterrupted business in the current situation
Retailers both offline and online along with e-commerce businesses at present are relentlessly encouraging their customers to make payments through digital channels to ensure a seamless checkout experience. In addition to seamlessness, digital payment technologies are also more secure, safe and fast. With a sudden surge in usage, many digital payment providers are bringing into play emergency plans to handle high volumes of payment. They are leveraging advanced technologies like artificial intelligence, machine learning and IoT to forecast the demand, manage customer queries, and help the merchants in providing a hassle-free buying experience for their customers. These technologies are facilitating easy access to credit and utilizing multiple layers of real-time data to smoothen supply chain disruptions & automation that can drive the MSMEs and small scale merchants to thrive once the crisis normalises.
The way forward
The Coronavirus pandemic is forcing businesses and merchants to try digital payment platforms like eWallets, UPI-based apps and net banking. This is leading to a sharp jump in the number of digital payment users. While this rise is indeed laudable, businesses and merchants must take this grim situation as a perfect opportunity to provide convenience and fungibility to their consumers, in terms of trust, for their continued primacy. Considering that the society operates on high levels of trust, the advantage of a pay-later or credit system can provide maximum value to the people. By allowing the customers the flexibility to make instant payments on every transaction, businesses can expand their reach, increase conversions, reduce overhead costs, maintain continuity and even increase their revenue despite being caught off-guard by the novel Coronavirus crisis.
Authored by Nityanand Sharma, CEO and Co Founder, Simpl