Kerala infra fit for digital economy

Kochi: Kerala is best suited to take advantage of the new found enthusiasm of the Union government for cashless economy as the state is endowed with the most widespread banking and ATM networks, a cross-section of the stakeholders said. Although cultural barriers still exist for making card payments, the indications from various sectors one month after the demonetisation point towards the willingness of the people to switch over to the new system.  

The idea of cashless economy cannot be considered as kite-flying by the political class, says Dr. V.K. Vijayakumar, investment strategist, Geojit BNP Paribas Ltd. “The short-term pain of the demonetisation is a reality, but cashless economy makes eminent sense in the long-term” he said. The full benefit of such a system would be accrued over period of two to five years, he said, adding Kerala with diminishing rural-urban divide and wide network of banks and other financial institutions can really take advantage of the situation.

The thrust placed on a cashless economy bringing a two percentage point increase in the tax-GDP ratio in the country would improve the financial position of the government in big way, he said. Petrol bunks in the state are one of the most visible segments of the change taking place in digital payment.   According to M.M. Basheer, secretary, All-Kerala Petroleum Dealers Association, the incidence of card payments moved up by 15 per cent from less than 5 per cent before the eradication of the '500 and '1,000 currency notes. “There is definitely and improvement in card payment. But, the major issue is network capacity. The time taken for confirmation of a payment at times is as high as 10-15 minutes,” he said.

The lack of availability of swiping machines is also a major issue as banks have run out of machines. “Currently most pumps in the state have only one swiping machine,” Mr Basheer said. “If the current trend persists the requirement of machines will be to the tune of 5,000, soon.” Thiruvanathapuram-based petrol dealer Sayed M. Khan said card payment has increased by almost 100 per cent following demonetisation.

“But the collection of service charge is leading to resistance from customers," he said. Mr Khan said instances of the customers getting messages of money being debited from their accounts despite the failure of the payment due to connectivity issues have also been reported. However, certain other segments have recorded huge rise in the use of plastic money. “Nearly 70 per cent of the purchase is now based on cards compared with 10 per cent before the demonetization,” P.S. Binu, a retailer of tyres in Thiruvananthapuram.