By Osama Manzar
Osama Manzar is founder and director of Digital Empowerment Foundation. He is also Board Advisor to Alliance for Affordable Internet (A4AI) of World Wide Web Foundation.
For a decade, with the rapid digitalisation across sectors, we have been talking about digital inclusion and exclusion, but it was only when the Covid-19 induced lockdown came into effect that it showed its ugly face. The need for ‘contactless payments’ seamlessly integrated into lives, across geographies and demographics, is crucial, now more than ever. The economic, educational, and social inequalities between those who have connectivity and online access, compared with those who do not, can be vividly seen.
Meanwhile, the Census looks at literacy as the ability of persons to read and write their names in any recognised official language. However, we know that is not enough.
Similarly, owning a mobile phone is not the same as being ‘digital’. Even owning a smartphone is not enough to be ‘digitised’ unless one has connectivity and knows how to access relevant and timely information on the Internet.
What does that mean for India? There are 731 districts in India; around 300 of them are officially recognised as backward districts of the country. This means the development indices here are poorer than the rest of the country. There are over 566 million Internet users in India but only 200 million are from rural India, which accounts for almost 67 per cent of the country’s total population. This lack of access to connectivity continues to increase the existing information darkness in these regions, impacting over 800 million people.
The scope of digital opportunities is far and wide, diverse and aplenty. But during this pandemic, we have come to a point where our dependency on digital infrastructure, digital content and digital economy is so high that a person who is not connected to the Internet is being adversely affected to access basic needs like food, clothing, house, wages and access to information. Despite having the universal Aadhaar coverage, nearly 400 million Jan Dhan accounts and around 100 million UPI users, there are significant challenges especially when it comes to digital financial inclusion. This was evident when nearly about 440 million people working in the informal sector were forced on roads due to lack of any social or financial safety net.
The adoption of online banking through digital payment systems, mobile apps, digital wallets and digital transactions is not just dependent on digital infrastructure or on an individual’s affordability. This shift is also a socio-behavioural phenomenon of a society and community which has developed over a period of time. Just like consumers made a swift move from SMS to WhatsApp messages, it’s evident that both urban and rural India needs ease, convenience and familiarity and tend to gravitate to platforms that they are attuned to.
The speed with which the urban regions are digitising with the buzz word 5G already doing the rounds from past few years, there are several factors why most of rural India has not been able to adopt online banking or digital payments. Most of the people in rural India lack reliable digital infrastructure and internet penetration stands at just one-fourth of the population of 800 million.
Since most of the people in rural India have unpredictable income and are unaware of government pension plans—which is one of the most efficient in the world—they do not have adequate savings or disposable income to either keep in the bank or to go beyond basic necessities to transact online. Most importantly, while most of the people who own mobiles and even smartphones at the household level have bank accounts, they lack digital and financial literacy to use it more than to make a call or text.
In the meanwhile, most of rural India, who are connected and have smartphones, and they are no less than 200 million, are profusely used to doing their daily work on WhatsApp. As WhatsApp awaits regulatory approval to launch payments to all of its users. Let me share my personal example: I have met organic farmers in Rajasthan who use WhatsApp groups to share knowledge, sell directly to customers, all without any training. They would seamlessly use payments reducing friction and participating in the digital economy. Further, creating a digital footprint will open avenues like microlending, insurance and other security benefits that they don’t currently have easy access to. This will unlock tremendous opportunities for the real India.
It may be a huge opportunity for the rural users if their daily habit app or digital activity also offers them payment and transaction capabilities with complementing safety and security. The progression of WhatsApp from a messaging tool to becoming a part of our daily lives, and then graduating to giving business tools, can finally become the preferred digital payment partner of the masses.
This article was originally published on Economic Times.