There is no denying the fact that demonetization in November 2016 acted as a catalyst in the rise of digital payment acceptance in India. In fact, following the demonetization drive as many as 12.54 lakh PoS terminals were added in the January-March quarter of 2017 alone, thereby establishing the positive impact of this much needed push towards digital payments by the incumbent government.
Fast forward to 2019 and in its Vision document titled 'Payment and Settlement Systems in India: Vision - 2019-2021', the Reserve Bank of India (RBI), has come out with a projection that there will be five million active PoS terminals in India and the total card acceptance infrastructure will be upscaled to six times present levels (as on May 2019) by the end of 2021. That's phenomenal growth, isn't it?
The Retail sector in India has been the biggest beneficiary of this growth in PoS machine adoption. Be it big-box retail stores or small retailers, the benefits of enabling digital payments are numerous as PoS adoption has helped retailers reduce risk, improve revenues and eliminate complexity in their business operations. The massive adoption of PoS machines in India is also an indication of the changing mood in the country with cash-driven purchases slowly but steadily being replaced with convenient and secure forms of digital payments. The transition, albeit slow is happening!
PoS adoption took a while to take off in the country, with the real impetus coming from several digital awareness initiatives by the banking regulator RBI and the government. Retail merchants are today empowered to accept multiple modes of digital payments such as debit/credit cards, UPI, mobile wallets, net banking, meal/gift cards, Bharat QR, reward points and even accept payment in local currency of an international shopper, all from a single PoS machine.
Now is the time to ask the question: Accepting digital payments, is that all that a PoS can do?
A point of sale for any retail outlet, large or small, is more than just a checkout counter. The problem is that not many retailers know that. A PoS can be approached as an 'Experience Center' for shoppers where they can be won or lost in a few seconds. A slow or complex payment experience can go a long way in negatively impacting the customer experience. Retailers, therefore, need to effectively leverage available opportunities at a PoS terminal to close higher volumes of sales and attract loyal customers.
Here's how it can be done:
Offer EMI to your customers- You can delight shoppers at your retail store by making products affordable for them. Offer bank/brand no-cost EMI schemes on the PoS machine instantly. Offering the EMI option during purchase has a proven use case in the e-commerce retail model and is a strategy that is clearly working for offline merchants as well. At Pine Labs, we recently witnessed a 300% jump in EMI-driven payments in offline retail during the Diwali festive season earlier this year
Loyalty - There is no dearth of studies to indicate that customer acquisition cost is way higher than the cost of retaining customers. It is therefore in the best interest of retailers to have a mechanism in place to a) identify and b) reward loyal customers. For instance, the Pine Labs POS machines are equipped to accept reward points as payment and at the same time empower the merchants to gain invaluable insights on payment transactions done using the reward points.
A cash-light economy is in the interest of everyone. It results in cost saving for the exchequer as the printing and transportation expenditures are considerably reduced. It also does away with the inconvenience of carrying cash by customers and tedious accounting processes that the merchants have to carry out. Having said that, what is important now is to make sure that the benefits of fintech are extended rapidly to small retailers and the mom-and-pop stores or kirana stores are also brought into the thriving PoS ecosystem. There is a need to move beyond the tier-1 and 2 cities and take the digital payments story to the next level.