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The way of life is progressing everyday, with new technological advancements, people tend to change accordingly, like reducing the use of cash and increasing the use of electronic media. For example, people used to mostly pay their bills and other expenses with cash and in person, now because of the technological advancements people can pay online, therefore reducing the need to use physical cash on a daily basis.
Businesses are adopting new payments methods, so they can keep up with what customers/people in an economy want. In order to survive in an economy businesses have to
adapt to changes. Big businesses usually make financial transactions mostly online, rather than with physical cash payments, as their transactions are usually in large sums. Big businesses adapt very quickly to change, so they always have a comparative advantage over small businesses. Example of big businesses that have mostly online net banking transactions rather than physical cash payments are Amazon, flipkart, Ikea, etc. Small businesses’ don’t usually adapt very quickly to changes in the market or the economy, as they mostly deal with cash rather than net banking. There are a few businesses in India adapting to net banking like paytm. There are approximately 350million users for paytm in India that is about quarter of the population using paytm. Unless small businesses adapt to new payment methods like paytm, they might not survive in the economy in the long run.
Business sales related Online transactions in India mounted up to $10.6 billion dollars in 2020, which is 26% of all online transactions in India. In india the digital payments has risen by almost 76% in the last 12 months, one main reason to this surge in online transactions is the covid pandemic, it has almost normalized online transactions in the economy. Most small businesses’ in India took time to adapt to online mode of payment. Over 10000 businesses in India shut down because they were unable to adapt to change during the covid pandemic.
There are some businesses that are only accepting online paid transactions, and this number is increasing as its an easier and safer mode of payment than physical cash. About 63.97% population in India prefer using online mode of payment, which is approximately 870 million people. Due to this businesses are introducing new ways to collect payments online (mostly the ones who are small in size and who usually deal in cash basis). Businesses are adapting so they don’t lose customers because that didn’t have physical cash.
By: Vatsav
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