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Cashless dream benefits China
As the governments at the Centre and in the states push for cashless transactions to ease cash chaos unleashed by the haphazardly-executed demonetisation, there is an unlikely beneficiary from the country’s new-found love for digital payments: China.
Hyderabad: As the governments at the Centre and in the states push for cashless transactions to ease cash chaos unleashed by the haphazardly-executed demonetisation, there is an unlikely beneficiary from the country’s new-found love for digital payments: China.
This may sound strange, but it’s true as India imports over 90 per cent of swipe machines used for cashless transactions in the country and almost all of them are from China and neighbouring Taiwan.
With the digital push reaching feverish pitch across India and traders rushing to acquire swipe machines to tide over the cash shortage, the imports are projected to jump multi-fold in near future.
“We depend on imports as India lacks manufacturing base to make swiping machines. Over 90 per cent of 1.5 million machines deployed in India so far, had been imported from China and Taiwan.
The imports are set to increase many fold as the government is encouraging cashless transactions post demonetisation,” Prabhu Ram, Managing Director, Paynear Solutions Private Limited, a city-based digital payment solutions provider, told The Hans India.
According to the industry insiders, the country imported nearly one lakh units of electronic data capture (EDC) devices or swipe machines in the last year.
Post the demonetisation announced on November 8 and the subsequent plans of the central government to encourage digital economy, the total imports are expected to zoom to two million units over next one year.
For instance, Paynear Solutions, which deployed over 10,000 machines across India till now, placed order for import of one lakh units recently after the demand for new devices shot up.
It subsequently enhanced the order size to two lakh units. Several other companies involved in this business also placed huge orders while State Bank of India, the country’s largest bank, announced plans to install 10 lakh new devices.
“We have seen five-fold jump in sales after the demonetisation announcement as more and more traders and business entities are now keen to use swiping machines because they don’t want to lose business due to cash shortage,” said the Paynear Solutions MD, adding that the company would deploy the first lot of one lakh new units over the next few months.
As per industry estimates, India will need anywhere between five to six crore devices in next few years as government is keen to push digital payments into rural hinterlands.
“It’s not that India doesn’t have the capability to manufacture these devices. But there was no commercial viability as the number of devices required was small in the past.
With higher demand now, companies are gearing up to set up plants here. But it will take time as the sector is highly regulated one,” said an industry insider.
Largely, these devices are priced between Rs 5,000 to Rs 15,000, but the cost is expected to come down once Indian companies start production locally.
