A recent study, sponsored by MasterCard, one of the top American multinational financial services corporations, has said that, despite the “self-inflicting shock … by demonetizing its currency” a year ago, India beats just one country, the neighbouring Pakistan, in what it calls digital experience – a term used for identifying adoption for online transactions.
Carried out by the Fletcher School’s Institute for Business in the Global Context at the Tufts University, bringing this to light, the study ranks in all 60 countries countries’ regulatory, infrastructural, and identity- and interface “present in the digital environment, identifying the countries “by speed, quality, and ease of use when transacting online.”
However, from the 60 countries, it chooses 42 countries for ranking "digital experience."
Principal investigator of the study, Dr Bhaskar Chakravorti, senior associate dean of International Business and Finance at the Fletcher School, says, the lesson from the study is that “digital adoption will not be meaningful unless users can trust the infrastructure to reliably deliver”.
Chakravorti adds, “If your policy does not, simultaneously, improve the state of friction-freeness in the digital experience, do not plan on the technology delivering transformational change.”
Says Chakravorti, In India, “With the exception of the Unified Payments Interface, a payments system that facilitates instant fund transfers between bank accounts on mobile platforms, all other digital payments transactions have declined.”
He adds, “All things considered, this modest change in digital uptake could deliver over the longer term, but it is not clear why invalidating 86% of the country’s cash was necessary to promote a single payment platform.”
Chakravorti underlines, “The Indian experience also helps us explore the reasons why the adoption of digital payments did not accelerate as one might have expected after demonetization. The explanation relies on an understanding of factors that drive digital adoption.”
“The quality of the digital experience is one such factor. If nothing else changes in their environment and incentives, and users’ digital experiences are poor, they will go back to the predigital status quo”, he believes.
One of the criteria used for analyzing digital use experience, which primarily concerns use of online transaction, the study seeks to find the answer of “how do users experience the digital trust environment?”. It says, “India alternates between maintaining momentum and self-inflicting shocks to its system by demonetizing its currency”.
Pointing out that India, along with China, are two countries where “the digital economy has been given high priority by their policy makers”, the study says, “India, for its part, reframed a drastic policy move that demonetized 86 percent of its currency overnight”, which has created “the effect of nudging consumers and businesses towards digital payments … mixed results.”
In its broader Digital Evolution Index (DEI) analysis of 60 countries’ “underlying drivers” – Supply Conditions, Demand Conditions, Institutional Environment, and Innovation and Change – the study ranks India 53rd.
The top-ranking ten countries on the DEI score are Norway, Sweden, Switzerland, Denmark, Finland, Singapore, South Korea, UK, Hong Kong, and USA. India is one of the ten bottom countries along with Philippines, Kenya, Egypt, Nigeria, Pakistan, Algeria, Cameroon, Bolivia and Bangladesh.
All of India’s competitors in the BRICS nations rank much better – Brazil 46th, Russia 39th, China 36th, and South Africa 43rd.
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