The demonetization of currency notes of Rs 500 and Rs 1,000 has widened the scope for digitization with 63 per cent retailers in rural as well as urban India willing to switch to the digital transaction of money, a study by Centre for Digital Financial Inclusion (CDFI) said.

The study carried out in two phases- pre-demonetisation and post-demonetization, found growing acceptance among retailers for the digital transaction before DeMo. However, post DeMo, more and more small traders showed their willingness to adopt the new payment gateways, the study said.

CDFI's executive director Krishnan Dharmarajan and principal architect of digital innovation lab of Indian Institute of Management-Bengaluru Shashank Garg led the study.

"We started our research two years back looking at how Kirana stores go cashless - what are the drivers, what are the barriers and the cashless ecosystem around Kirana stores. Our study was to find how poor can be central to the technology-driven transaction", Dharmarajan said.

When the survey was underway, theDeMo happened (on November 8 last year, he said.

"We had to recalibrate our study. This gave a perspective to our study such as behavioural changes (among retailers) before and after the DeMo. We found that 63 per cent retailers wanted to go cashless, which was only 31 per cent before the note ban", he said.

This willingness, however, did not reflect in the actual transaction. Till March this year, the actual cashless transaction was only 11 per cent though the interview showed 63 per cent retailers willing for it, he said.

There was 11 per cent digital transaction across the board, whether rural or urban areas. The perception has Changed substantially with a large number of people willing to embrace it, Dharmarajan said.

As note ban pushed the demand for cashless transaction, finance minister Arun Jaitley announced that 10 lakh point of sale would be made available in the market, he said, adding, the country had 94 per cent mobile users of which 41 per cent people had smart phone, which was a good sign to adopt cashless transaction.

The road to the digital transaction was faced with numerous challenges, the CDFI said, citing that opening the current accounts was still complicated.

It was also noticed that a fear existed among retailers that usage of the digital platform would bring them in the tax net.

The fear could be countered by carrying out awareness campaign, Dharmarajan said.

He said more digital interface would help create a transaction history for the small retailers and enable them to get loans from banks.

This would pave the way for more entrepreneurs emerging from different parts of the country, Garg said.

The CDFI surveyed 305 consumers and 88 retailers before demonetization while post demonetization, it interviewed 1,715 consumers and 535 retailers.

The survey was carried out in 11 towns across 11 states.

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