Rebooting the in-store payment experience for Kirana stores in India

There is no denying the fact that the local neighbourhood mom-and-pop stores also knows as Kirana stores emerged as the unsung heroes of the COVID-19 pandemic in India. The backbone of India’s retail growth story, Kirana stores were the beacon of hope during the onset of the pandemic when several of the mighty app-based big e-commerce ventures crumbled against the logistics constraints arising out of the lockdown measures in India.

Pandemic has renewed trust in the local Kirana store. One cannot ignore the fact that India is a huge retail market, majorly decentralized and primarily consists of the unorganized retailers including local mom-and-pop stores aka Kiranas, in addition to the brick-and-mortar large retailers, hypermarkets and supermarkets. The supremacy of Kirana store is largely because they have their pulse on the local markets they operate in, stock a smart merchandise mix of local known brands with national ones, give customers the touch and feel experience, and option to buy in low volumes.

Digital India train cannot chug along on its intended course if the digitisation needs of the entire country are not considered. When talking about digitising the in-store payment experience at Kiranas, one must not look at just the urban Kirana stores of the modern India. Gone are the days of technology segregation and waiting for decades to match the rural belts to the technological advancements being seen at their urban counterparts. Today, merchants and customers are fast adopting digital modes of payments in Bharat and therefore the Kirana stores in rural India (read: Bharat) can no longer be ignored from the realm of digitisation.

According to a report released by ShareChat titled ‘Bharat — The Neo India’ in association with Group M, in terms of choice of a mode of online payment, Bharat users are adept at using UPI for online transactions and in fact have a lead over India users in terms of net-banking and debit cards transactions online. Add to that the fact that there has been a 45% growth in active internet users in rural India since 2019, as per a Nielsen study[1], Kirana store digitisation in non-metro cities and the hinterlands therefore assumes significant importance.

Today, Kirana stores in rural areas are embracing UPI payments via QR codes in a big way. India is ripe for disruption in mobile payments with low data costs, cheaper smartphones, proliferation of internet across the length and breadth of the country, and now the introduction of UPI 123Pay wherein feature phone users can pay via UPI by calling an IVR (interactive voice response) number, accessing the app functionality in feature phones, through a missed call and proximity sound-based payments technology. Sky is the limit for UPI adoption in India and rising consumer interest merits that Kirana merchants in Bharat are empowered with PoS terminals with digital QR capabilities and several other integrations to grow their business.

No wonder that India’s banking regulator The Reserve Bank of India (RBI) has also operationalised a Payments Infrastructure Development Fund (PIDF) to subsidise deployment of Points of Sale infrastructure in tier-3 to tier-6 locations and northeastern states of India.

In addition, there will have to be undertaken mammoth efforts to improve digital literacy in India and build trust in digital payments. A lot has already been done in this respect and a lot still needs to be done. Smart measures like incentivising adoption and rolling out apps in vernacular languages will strengthen the ongoing digital payments adoption in rural India and bring in more Kirana stores in the country under the ambit of digital payments.

(The author of this article is Sunil Param, Head of Content and Communications at Pine Labs. Views expressed in this article are that of the author.)

[1] https://www.nielsen.com/news-center/2022/nielsens-bharat-2-0-study-reveals-a-45-growth-in-active-internet-users-in-rural-india-since-2019/