Migrating away from cash is intimidating – Stickiness of Cash Part 2

Ask any payment professional, and while they might disagree on what’s the best payment experience, they would all agree that Cash is sticky.

And one of the core reasons for the stickiness of cash is that the migration journey is intimidating for most cash-heavy users.

Too many choices

Here are some of the many questions the cash users who want to migrate away from cash, grapple with:

  • Is it safe to use a card for payments
  • Should I use a separate card for ATM withdrawals and purchases
  • What should I start using – prepaid, debit, credit , mobile wallets
  • If it’s a card, should I go for a basic, gold, platinum or some other variant
  • Should I get a product with shopping benefits or one with fuel? or the one with air-miles
  • Should I take a Visa or a MasterCard or a Rupay
  • I have accounts with multiple banks, whose product do I begin with
  • How do I apply for the card? Can I apply online, or do I go to the bank branch?
  • What is a UPI or IMPS payment? How do I do that? What is the fees on the transactions?

…….And it goes on and on.

The simple fact is that there are way too many products with different features, brands, offers,benefits and form-factors. It is a tough choice to make.

And post demonetization, most banks are  show-casing ALL their products in each of their ads. Leaving it to the consumer to pick and choose.

I have seen Mumbai buses covered with ads, that have all the digital payment instruments from that bank. Not sure if most consumers even know what those mean.


The famous Malcolm Gladwell research on choices, happiness and spaghetti sauce also harps on the risk of too many choices.

The migration away from cash, has to be made easier with fewer choices or a recommended path to walk on (recommendation itself coming from a trusted partner).

In the absence of this, most consumers prefer a wait-and-watch stance. And the product(s) with simpler choices and/or more brand-ambassadors will see higher adoption. No wonder, many a millennial adopted the mobile wallets. There were no variants of PayTM, Mobikwik etc.

And this brings us to the other point.

Hurdles in the migration

Ok, so you have a cash-user who is convinced about that one digital payment from your bank. How does she go about getting started?

Do you remember the forms you filled to get your first credit card.

I remember that during my Deal4Loans days, the card application forms used to have almost 50+ fields across some 4-5 stages of the online application for most banks.

While the consumer on-boarding has come a long way in the digital era, it still is complicated for many products/banks. Unless the consumer is really convinced about this migration, why would they jump through so many hoops to get the product.

The access and on-boarding has to be simpler. A convinced consumer should be active on Day 0 if not within Hour 1.

In my opinion, if we are serious about displacing cash, we need to make the transition a simpler choice for the consumers.

What do you think?

This is part 2 in a series of posts where I try to understand why Cash is sticky? What are the some of the obvious things, we may have overlooked in our zeal to digitize payments.

Here’s part 1 , where my humble submission is that Cash is not really the enemy. Atleast not in the eyes of the consumers.

Why is Financial Inclusion important?

Financial Inclusion is a common theme across multiple initiatives both by governments and private sectors across economies. Especially in the developing world, it would be safe to say that Financial Inclusion must be in the top 5 priorities of the respective governments.

But why exactly is Financial Inclusion important ?


Financial Inclusion takes an economy towards more equal opportunities

Financial access is a key component towards providing equal opportunities and equal access for growth for various segments of the society. Just like education, nutrition and healthcare access are critical in driving growth of a population, so is access to finance and payment instruments. The Better Than Cash Alliance (Bill & Mellinda Gates Foundation) says in its 2014 report for the Australian Presidency

Studies show that broader access to and participation in the financial system can reduce income inequality, boost job creation, accelerate consumption, increase investments in human capital, and directly help poor people manage risk and absorb financial shocks

And why exactly do we need to work on removing inequality?  As Christine Lagarde (MD, IMF) said in her  June 26, 2014 speech at Mexico, the need for removing inequality goes beyond moral principles. It is a key ingredient for sustainable growth.

Inequality is not just a moral issue—it is a macroeconomic issue. Our research tells us that countries with higher inequality tend to have lower and less durable growth. Inequality chokes the prospects for individuals to realize their full potential and contribute to society. Whether it is through personal experience or empirical evidence, one thing is clear—growth has to be more inclusive, and for this finance has to be more inclusive

Financial Access can increase investments

Whether it is individuals or small/medium firms, access to finance, builds the environment and comfort for savings and investments. This could be because of multiple factors:

  • Access to credit
  • Access to easy, safe, reliable means of savings and investments
  • Triggers and reinforcements (social, system-driven) that induce a culture of saving and/or risk-taking, investing etc

Financial Access provides security/insurance

The impact of negative scenarios is significantly high for those who have no financial security or insurance. The ability of an individual or a community to bounce-back from a calamity is directly related to the access of funds made available during such times of need. Insurance has the other advantage of providing mental peace and a mindset where the poor are not constantly worried about basic sustenance.