Drivers of Cashless Transactions
in the Unorganized Retail Sector in India

Drivers of Cashless Transactions in the Unorganized Retail Sector in India

CDFI in collaboration with IIM Bangalore is conducting a research study ‘Facilitators for Cashless Transactions in Retail Supply Chain(s)’ with specific reference to ‘Kirana (convenience / grocery) Stores’ in India. The cost of cash and various issues related to handling cash are discussed in depth in various research articles, media and policy documents. There are various transactions which have gone cashless given the convenience and advantages it provides. For example, salary transfers, buying air and rail tickets, buying big ticket items like electronics, home appliances etc.

However, the usage of cashless modes such as debit cards, credit cards, and mobile wallets for small transactions in kirana supply chain is still minimal and there is a need to study the reasons for cash dominance in the kirana supply chain. Moreover, the sheer volume and frequency of transactions in kirana supply chain make it critical to understand factors which affect the decision of going cashless in kirana supply chain. Therefore, it is necessary to understand through a research study - (i) the current usage of the cashless mode of transaction in kirana supply chain; (ii) perception of various kirana supply chain stakeholders about cashless transactions.

With the above points, we explore following research questions as a part of this study-

  • What is the current usage for different cashless systems by various kirana supply chain actors?
  • Are the kirana supply chain actors willing to use the cashless system in future?
  • What are the bottlenecks/roadblocks in going cashless for kirana supply chain?

In order to answer aforementioned questions, we are conducting quantitative and qualitative studies involving various stakeholders in the kirana supply chain. These stakeholders include actors such as consumers, retailers, wholesalers, distributors and manufacturers as well as influencers such as bankers, NGOs and village heads (Sarpanch).

We are conducting the survey in two phases involving 11 districts across India. These districts have been selected randomly with an equal focus on three MPCE (Monthly Per Capita Expenditure) classes- Low, medium and high.

Through this study we will understand the current behaviour, future perception and possible bottlenecks of going cashless for kirana supply chain. Various behavioural aspects such as the inability to adopt new systems, mobile literacy etc. is explored rigorously using qualitative as well as quantitative questionnaires. Understanding the status quo and bottlenecks in adoption to cashless system is critical in understanding drivers of cashless systems in kirana supply chain. By analysing the data collected through this study, we intend to characterize the kirana supply chain using a framework which may help policy makers / regulators / firms in designing mechanisms which may help in adoption of cashless system by various stakeholders of kirana supply chain.

Blogs

  • Kirana stores: The need to go cashless

    Kirana stores: The need to go cashless

    18 Feb 2016

    It is tough to imagine a world without retail outlets given the significant part they play in our lives. In India, retailing is next only to agriculture in terms of the total workforce employed. As per a KPMG report on Indian Retail, there are more than 14 million retail outlets in India and the siz

  • Explained: Why you are not able to pay through your debit card at the local kirana store

    Explained: Why you are not able to pay through your debit card at the local kirana store

    01 Oct 2015

    In Delhi, the share of cashless payments is still very low for medium (12%) and small (7%) retailers, though large retailers claim to have 33% of their consumer payments in cashless mode.

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