“You want to know where the machine is now?” Pravin Gholap asked. “I will have to look for it.”
Gholap and his assistant began to scan the crammed shelves of his hardware and stationery shop in search of the card-swiping or point of sale machine that he had installed in December, a month after the government had demonetised high-value banknotes amounting to 86% of India’s currency. After a protracted search, Gholap’s assistant finally found the machine tucked away behind a pile of boxes of fireworks.
Gholap’s shop is in Dhasai, a mid-sized village in Thane district, just to the north of Mumbai, 100 kilometres away from the city. In December last year, this village, which is not near any major highway or railway station, shot into the news as India’s second cashless village and Maharashtra’s first.
From stationery shops to beauty parlours, news reports declared, everyone had begun to install point of sale machines, sponsored by the Bank of Baroda, in an effort to encourage a shift to digital transactions. Both the central and state governments claimed that demonetisation would spur the move to the digital economy nationwide, thus bringing more people in the formal system. When Scroll.in visited Dhasai in the third week of December, many shopkeepers were enthusiastic about the new machines that would allow them to continue to sell to customers without cash.
But 10 months later, the enthusiasm has faded.
With cash flowing freely once again, there are almost no takers for cashless transactions, as merchants reckon with transaction fees, fluctuations in network connectivity and a simple lack of debit cards among customers.
Around 70 of 100 members of the local traders’ body, Dhasai Shahar Vyapari Association, opted for the free point of sale machines sponsored by Bank of Baroda in December, according to its president Swapnil Patkar. Today, traders say only around 25 still have functioning machines, even if they do not use it.
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Gholap, for instance, stopped using his machine soon after he got it.
“We used it for just 15 to 20 days and that too when we asked customers to pay by card,” Gholap explained. “Now the machine itself doesn’t work anymore so we just put it away.”
Initially, the problem was that most of his customers did not have debit cards because they did not have bank accounts. Without steady jobs that pay them regular salaries, many did not see the value in keeping one. Even those who had bank accounts – for instance, shopkeepers – stopped depositing cash earnings in banks.
“The ATMs did not have cash so people did not deposit their earnings at all,” Gholap said. Depositing cash would mean waiting for bank withdrawals when they needed it. “Since they did not deposit money in the bank, they could not use debit cards even if they had them and wanted to.”
Another problem was poor internet connectivity. The lack of network meant transactions on the machines did not get logged, leading to general disgruntlement.
Many shopowners in Dhasai did not opt for the point of sales machines in the first place.
“It was just drama,” said Eknath Dhavad, a tailor on the main street. “Only those who are employees use it. There is no MIDC or any highway near this village so most people don’t have that kind of job. If the customers themselves don’t have cards, how will anyone use machines in this tribal area?”
Dhavad himself never bought the machine, nor did he ever use it.
Sachin Tupange, who runs a store that sells ladies’ watches, lipsticks and nail polish, also never opted for a point of sale machine. His customers are women who do not have debit cards. His sales usually slacken at this time of the year, in the months between Ganesh Chaturthi and Diwali. This year, however, because his business never really recovered after demonetisation, the slump is far higher.
“Mostly ladies buy only items worth less than Rs 500 so they use only cash anyway,” Tupange said. “But they have been buying less of late.”
Further down the road, a general and medical store owner, who asked not to be identified, began to laugh when this reporter asked him about the status of “cashless Dhasai”.
“What do I say?” he asked. “Whatever Modi has done so far has happened only on paper. This is all a fraud, a natak. People here wanted to bring politics into it and that was why we got this tag. You won’t find any of his bhakts here anymore.”
The store owner had applied for a machine from Vijaya Bank during demonetisation. He never received it.
Did he never think to apply for a machine from any other bank when this was delayed?
“My account was in Vijaya Bank so why should I spend Rs 10,000 for a new account, then Rs 750 each month for a rental, then ask the customer to pay an additional 2% on every transaction?” he asked, still smiling wryly.
Government should help
Even Swapnil Patkar, president of the Dhasai Shahar Vyapari Association, who along with Ranjit Savarkar of the Swatantryaveer Savarkar Rashtriya Smarak trust in Dadar, Mumbai, first pitched the idea in the village, seems disheartened.
“The government only told us to go cashless, but now that we have problems, there is no government support,” Patkar said. “Network is a huge problem now. We have asked BSNL, Idea and Vodafone to extend their networks here, but have received no responses.”
When Patkar and Savarkar decided to make Dhasai cashless, they had first approached the two banks in the village, Vijaya Bank and Thane District Cooperative Central Bank. Both quoted high deposit charges for the machine on top of monthly usage fees. Savarkar then convinced Bank of Baroda to provide the machines free of charge. This bank, however, has no branch in the village. It opened an ATM on June 1.
According to Patkar, of the 17,000 accounts with Vijaya Bank and 27,000 with Thane District Cooperative Central Bank, only between 2,000 and 3,000 people actually have debit cards they can use to conduct cashless transactions.
“Because we didn’t take machines from these two banks, they are now giving us problems in issuing cards,” Patkar said. “So even if the ATMs in the village work, we have no cards. Only around 25% of the people who are educated and qualified have cards.”
Narayan Kori, manager of the Dhasai branch of Vijaya Bank, denied this. “It is compulsory for all customers of Vijaya Bank to have debit cards,” Kori said. “We have not issued cards only to those who are illiterate and so cannot operate them.”
According to Kori, around 50% of the bank’s account holders in Dhasai have debit cards. Since October, the bank has issued 550 cards to customers, but has now run out of stocks to issue fresh cards. The bank has also received around 12 applications from current account holders for point of sales machines, though these are yet to come in.
There are some who are still holding out for a cashless future. Lakhan Mali, 25, who started a vessel and cupboard store in Dhasai two years ago, is one of the few shopowners who still uses the machine – though it was charging at home and not in his shop at the time this reporter visited. More than the machine, Mali said, his customers preferred to use PayTM, a popular mobile wallet.
“Very often the network here doesn’t work [in the machines] so in that case we use PayTM instead,” Mali explained. It is sometimes difficult for machines to catch a network. With PayTM, however, even if customers send a message and it is not delivered immediately, the transaction at least can be logged. “At most, I use the machine two to four times a month. Otherwise, most of my sales are still with cash or PayTM.”
But even Mali agrees demonetisation failed – at least when it comes to making Dhasai cashless.
“Those who had debit cards before demonetisation still have them,” he said. “And those who did not have the cards still don’t.”