Koan Advisory Group: Available payment mechanisms should be strengthened to encourage digital transactions


It is essential to improve the quality of digital payments services in India to sustain their usage, according to User Experience with Digital Payments in India, a report by Koan Advisory Group, a New Delhi-based public policy consultancy. The principal reason behind this increased usage is the COVID-19 pandemic, which forced users to purchase commodities online, maintain social distancing and minimize cash payments.

The report presented findings from a survey of approximately 5,000 people to evaluate user experiences with digital payments and identify necessary reforms to encourage this behavior. The survey was conducted in the initial phase of the pandemic in the country.

Users pay significant attention to the ease, safety and reliability of online transactions – just like they would do with cash payments, according to the survey. One-third of respondents said that before transacting, they checked whether basic requirements such as an internet connection and common payments systems were in place. Privacy and security of transactions were other aspects that users paid particular attention to, the survey added.

Only a small minority reported conducting transactions if these factors were compromised. When it came to grievance redressal, over two-thirds of survey respondents reported that their problems were resolved within a week.

However, 48 percent of users were given inadequate explanations, unsatisfactory resolutions, or were unable to recover their money. The survey results also indicated a wide variance in the grievance redressal process itself.

Most people contacted payment service providers, e-commerce platforms, and banks when they faced problems. Amongst the parties contacted to address problems, e-commerce platforms seem to have the easiest processes, while the police had the most cumbersome one.

Koan Advisory’s report says that current mechanisms should be strengthened, and new measures should be ushered in, to encourage the adoption of digital payments. It added that regulatory interventions can help remedy deficiencies in service quality, so that users feel secure about transacting online. Prescribed standards, an increase in user awareness and access to infrastructure can help maintain a quality-of-experience framework for digital payments.

Global best practices suggest that standards for quality of services should include measuring the completion of transfers, transfer declines, and norms for grievance redressal.

The Reserve Bank of India (RBI) has recently announced that it will measure indicators of “consumer centricity” such as complaints and transfer declines under its “Digital Payments Index”. According to the report, the next step after this exercise is to set standards for the quality of service as defined by these metrics.

Finally, only enhanced consumer awareness can ensure that users exercise the rights provided to them by the regulatory framework, said the report. It lauded the RBI’s plan to establish Consumer Financial Literacy Centres in every block as a step in the right direction.

The survey for this report was conducted by Youth Ki Awaaz, a user-generated platform for young Indians. Its authors are Shivangi Mittal and Varun Ramdas, associates at Koan Advisory Group.

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