[vc_row equal_height="yes" content_placement="middle" type="image" enable_parallax="false" parallax_speed="0.4" padding_top="110" padding_bottom="0" bg_image="40136"][vc_column][kleo_gap size="100px"][vc_row_inner][vc_column_inner width="1/6"][/vc_column_inner][vc_column_inner width="2/3"][vc_custom_heading text="USING BEHAVIORAL INSIGHTS TO IMPROVE DIGITAL FINANCIAL CAPABILITY (DFC) OF CUSTOMERS: KEY LEARNINGS FROM OUR EXPERIMENTS ACROSS DIFFERENT ECOSYSTEMS" font_container="tag:h2|font_size:48px|text_align:center|color:%23ffffff|line_height:54px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][/vc_column_inner][vc_column_inner width="1/6"][/vc_column_inner][/vc_row_inner][kleo_gap size="140px"][kleo_gap size="50px"][/vc_column][/vc_row][vc_row equal_height="yes" content_placement="middle" padding_bottom="0"][vc_column width="1/2"][/vc_column][vc_column width="1/2"][vc_row_inner equal_height="yes" content_placement="middle"][vc_column_inner width="5/12"][/vc_column_inner][vc_column_inner width="1/3" css=".vc_custom_1488531456733{padding-right: 0px !important;}"][vc_column_text letter_spacing=""][addtoany][/vc_column_text][/vc_column_inner][vc_column_inner width="1/4" css=".vc_custom_1488531444909{padding-left: 0px !important;}"][kleo_button title="Print this page" href="https://cashlesscatalyst.org/wp-content/uploads/2019/01/MoT-Learning-Note.pdf" target="_blank" style="custom" position="left" size="lg" special="no" border="no" icon="print" font_size="16px" letter_spacing="" el_class="grey-icon" custom_text="#d11e3c"][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="color" bg_color="#ffffff"][vc_column][vc_custom_heading text="About CATALYST" font_container="tag:h2|font_size:26px|text_align:left|color:%23383b3b|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_row_inner css=".vc_custom_1537456868816{margin-bottom: 35px !important;}"][vc_column_inner][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]CATALYST is a user-centric ‘digital financial inclusion innovation platform’ for the underserved last mile. The initiative is funded by the United States Agency for International Development (USAID) under the mSTAR Program, through funding provided to FHI 360. Housed within the Institute for Financial Management and Research, Leveraging Evidence for Access and Development (IFMR LEAD), the initiative aims to expand digital payments and financial inclusion in India.CATALYST identifies, develops and validates solution frameworks and business models in collaboration with facilitating government agencies and participating industry solution providers to responsibly transition small business ecosystems (i.e., merchants, consumers, suppliers) from an inefficient cash economy to digital payment platforms, and further onto broader digital finance solutions. CATALYST has also launched a new business incubator, ‘Fintech for the Last Mile,’ to promote entrepreneurs focused on developing innovative digital finance solutions for traditionally underserved segments.[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_custom_heading text="Acknowledgements" font_container="tag:h2|font_size:26px|text_align:left|color:%23383b3b|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_row_inner css=".vc_custom_1537456868816{margin-bottom: 35px !important;}"][vc_column_inner][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]
<div>The authors thank and acknowledge the support of Arbind Vishwakarma,</div>
<div>Deepti KC, Tunisha Kapoor and John Arun for the insights from their respective projects. Thanks also to Harsh Pandey (FHI 360), Jayshree Venkatesan, Ankur Gautam and Preethi Rao for editorial reviews and feedback, and to Badal Malick and Sharon Buteau for their consistent support and encouragement.</div>
[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="image" bg_color="#c9213b" enable_parallax="false" padding_top="150" padding_bottom="150" inline_style="font-style: normal;" bg_image="40098"][vc_column][vc_row_inner][vc_column_inner][vc_custom_heading text="EXECUTIVE SUMMARY" font_container="tag:h2|font_size:26px|text_align:center|color:%23ffffff|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing="" el_class="normal-style "][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="color" bg_color="#ffffff" inline_style="font-style: normal;"][vc_column][vc_row_inner][vc_column_inner el_class="normal-style "][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]

Evidence suggests that the use of digital financial services can offer benefits such as increased financial transparency, accountability and inclusion. ¹For customers to adopt these solutions, however, it is very important that they see value in these solutions and have the ability and willingness to change their existing habit. This paper elaborates our learnings from experiments deployed by us to improve the uptake of digital payments and promote digital financial inclusion of the population. Some key insights from our field work and interactions with stakeholders include:
<ol>
 	<li>Both the end-consumers and the merchants aren’t proactively looking for digital financial solutions, so the hook to adopt these will have to be very strong. It must be a solution that meets a specific personal need for it to be relevant.</li>
 	<li>Digital financial services are seen as a ‘double-edged sword’ - While majority agree that digital payments and services are convenient and helpful, there is a perceived risk to one’s money due to mistrust in using technology for finances and lack of confidence in their data being kept private. It is very important for the solutions, communication channels and influencers to be trust-worthy to drive adoption.</li>
 	<li>Another aspect that is critical to build customers’ trust is seamless alignment of solutions with emerging technologies. Currently, there are many teething problems with some of the nascent technologies that use UPI or AEPS. If solution providers cannot fix these issues, these liabilities should be clearly defined and communicated to the customers – so that there is no lack of trust later.</li>
 	<li>Adoption of digital financial services is directly proportional to a customer’s familiarity with technology and his/her state of financial inclusion. Taking a low-income individuals on the route to digital financial inclusion, who may or may not have bank accounts to begin with, is a long-drawn process requiring sustained interventions. It is therefore important to first identify the early adopters - example someone who is actively banking and has a smartphone -as they will be more open to change. Once onboarded, they can be the change-agents in networks where they are trusted.</li>
 	<li>Merchants are ready and willing to offer any digital payment solution that the consumers ask for, but the push must be driven by consumers’ demand for it so that it improves their business. Therefore, the initial capability focus for the solution providers should be end-consumers as it is their interest and intent that will decide the merchants’ interest.</li>
 	<li>Taking financial decisions is, in general, perceived to be a complex task – especially by women where they pass on the task to men of the household. There could be various societal norms at play here, but it is very important to take out the complexity from matters related to money. Simple digital solutions can help boost confidence of women and others who might be finding financial decisions complex, in general, and address this need for simplicity in finance.</li>
 	<li>Once people convert to digital payments, they sustain this behavior easily. It requires substantial time and effort to communicate benefits and handhold a consumer to onboard a new digital payments platform. However, once they are onboarded and have personally experienced the convenience of digital payment solutions, people continue to use them.</li>
 	<li>Integrated digital financial inclusion programs should focus on the entire cycle from awareness to sustained change with a specific solution at every step.</li>
 	<li>Finally, to communicate various value propositions and build digital financial capabilities of customers, CATALYST used different channels to reach out to them. We found that a mix of social media and interpersonal channels is important to reach different profiles of people (youth, working men, self-employed women, housewives) who would be at different stages of the adoption curve. For merchants, since they have little active interest in digital payments currently, the format needs to be trusted, easy, engaging and, most importantly, backed by support.</li>
</ol>
<a href="http://documents.worldbank.org/curated/en/332881525873182837/The-Global-Findex-Database-2017-Measuring-Financial-Inclusion-and-the-Fintech-Revolution">http://documents.worldbank.org/curated/en/332881525873182837/The-Global-Findex-Database-2017-Measuring-Financial-Inclusion-and-the-Fintech-Revolution</a>
[/vc_column_text][kleo_gap][/vc_column_inner][/vc_row_inner][vc_row_inner][vc_column_inner][kleo_gap][vc_column_text letter_spacing=""]
<div style="text-align: center;">Figure 1: The adoption continuum and learnings</div>
[/vc_column_text][vc_single_image image="40265" img_size="full" alignment="center"][kleo_gap][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="image" bg_color="#373b3c" padding_top="150" padding_bottom="150" inline_style="font-style: normal;" bg_image="40100"][vc_column][vc_row_inner][vc_column_inner][vc_custom_heading text="2. WHAT IS DIGITAL FINANCIAL CAPABILITY AND WHY IS IT IMPORTANT?" font_container="tag:h2|font_size:26px|text_align:center|color:%23ffffff|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing="" el_class="normal-style "][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="color" bg_color="#ffffff"][vc_column][vc_row_inner equal_height="yes"][vc_column_inner el_class="normal-style"][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]
<div>Financial capability is defined as ‘the combination of knowledge,</div>
<div>skills, attitudes, and behaviors a person needs to make sound financial decisions. ³We defined digital financial capability as the ability and willingness of the customers to use digital financial services. The key levers that we tried to impact through our work were awareness and knowledge of various options available, how to use the service, attitude towards the service (i.e. willingness), using the service and finally repeated use (sustained behavior and advocacy).</div>
[/vc_column_text][kleo_gap][/vc_column_inner][/vc_row_inner][vc_column_text letter_spacing=""]
<div style="text-align: center;">Figure 2: Levers of DFC</div>
[/vc_column_text][vc_single_image image="40266" img_size="full" alignment="center"][vc_column_text letter_spacing=""]
<div>In isolation, while digital financial literacy shifts the responsibility onto consumers to decide for themselves and to act on the available options, DFC handholds consumers to the last mile by building their capacity to act as well as providing clear opportunities to do so. With the DFC approach, our intent was to convert people’s knowledge into action.  It is not just about making them aware; it is about filling the huge gap between awareness and action by providing specific end-to-end solutions throughout the adoption journey.</div>
<div>To change the sticky behavior of using cash, people do not just need to be educated about alternative solutions but also need clear answers to ‘why they should change’ and ‘how they should change,’ i.e., they need to have a value proposition or a nudge that will propel them to drop a habit. While ‘why’ will drive their willingness, the ‘how’ will increase their ability to transact.</div>
[/vc_column_text][vc_column_text letter_spacing=""]<a href="http://³ http://content.centerforfinancialinclusion.org/wp content/uploads/sites/2/2018/05/CFI_Brief_005_Banking_Sector_Approaches_05-29-2018.pdf">³ http://content.centerforfinancialinclusion.org/wp content/uploads/sites/2/2018/05/CFI_Brief_005_Banking_Sector_Approaches_05-29-2018.pdf</a>[/vc_column_text][/vc_column][/vc_row][vc_row type="image" bg_color="#c9213b" padding_top="150" padding_bottom="150" inline_style="font-style: normal;" bg_image="40101"][vc_column][vc_row_inner][vc_column_inner][vc_custom_heading text="3. ECOSYSTEMS WHERE WE DEPLOYED DIGITAL FINANCIAL CAPABILITY EXPERIMENTS" font_container="tag:h2|font_size:26px|text_align:center|color:%23ffffff|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing="" el_class="normal-style "][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="color" bg_color="#ffffff"][vc_column][vc_row_inner equal_height="yes"][vc_column_inner el_class="normal-style"][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]We first identified the ecosystems wherein digitization could solve the existing problems by bringing about behavior change.

<strong>Dairy: </strong> A small-value daily purchase such as milk – which involves a number of stakeholders in the supply chain to finally bring milk to the end-consumer – presented a great opportunity for large-scale behavior change. There were four key players we could influence for behavior change across the dairy supply chain: Jaipur Dairy (supplying dairy products under the brand name Saras); dairy distributors; retailers at the booths; and end-consumers. Jaipur Dairy was already accepting payments digitally from distributors, allowing settlement only through bank transfers or checks. This meant that the distributor had to digitize the cash that s/he collected from the retailer; her/his cash collection agent would collect cash from all the retailers and then the distributor would visit banks multiple times to deposit it. There was also the problem of loose change during point-of-sales transactions and the risk of theft from cash collection agents. Digitization of payments along this supply chain from Jaipur Dairy to the end-consumer could resolve all these problems. Details of our work in the dairy ecosystem are presented in Annex 1b.

<strong>EMitra: </strong> eMitra is an e-governance platform offered by the Government of Rajasthan that provides 387 government to customer (G2C) and customer to business (C2B) services such as electricity or water bill payments to its citizens. Rajasthan has over 52,000 physical eMitra centers across the state of which approximately 5,000 operate in Jaipur. Any eMitra entrepreneur must deposit an upfront amount of INR 1 lakh with the government to start providing these services to customers. Given that 98 percent of these transactions are made in cash by end-consumers means that the eMitra entrepreneurs face the burden of high initial working capital and loss of business when they are busy with bank visits to digitize their cash. Once we identified these challenges, we wanted to create an enabling environment for end-consumers to pay digitally for eMitra services. Details of our work in the eMitra ecosystem are presented in Annex 1c.

<strong>Bhatta Basti: </strong> In this migrant slum cluster, to understand the target population and assess their financial needs, CATALYST conducted a survey with randomly selected 442 low-income households in August 2017.⁴ The study indicated useful statistics such as the majority of the bank account holders in Bhatta Basti were male heads of the family; only about 39 percent of the primary earners had any kind of savings; people largely relied on cash-based payments; and a mere 6 percent of the households had any information on digital payments. This highlighted the need for a step-wise approach to first educate consumers about the basic tenets of account opening, help open accounts for use, and then introduce them to the concept of digital financial payments and solutions. Details of our work in the Bhatta Basti ecosystem are presented in Annex 1a.[/vc_column_text][vc_column_text letter_spacing=""]
<div style="text-align: center;">Figure 3: Key demographics from Bhatta Basti</div>
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<div>For each of these ecosystems, we first mapped the journeys of our customers from awareness to adoption and identified triggers and barriers to then design value propositions and channels to influence their behavior.</div>
[/vc_column_text][vc_column_text letter_spacing=""]
<div>For more on the survey, check  <a href="https://cashlesscatalyst.org/how-digitally-ready-are-the-urban-ultra-poor/">https://cashlesscatalyst.org/how-digitally-ready-are-the-urban-ultra-poor/</a></div>
[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type="image" bg_color="#c9213b" enable_parallax="false" padding_top="150" padding_bottom="150" inline_style="font-style: normal;" bg_image="40098"][vc_column][vc_custom_heading text="4. UNDERSTANDING OUR CUSTOMERS’ NEEDS, TRIGGERS AND BARRIERS TO ADOPTION OF DIGITAL FINANCIAL SERVICES" font_container="tag:h2|font_size:26px|text_align:center|color:%23ffffff|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing="" el_class="normal-style "][/vc_column][/vc_row][vc_row type="color" bg_color="#ffffff"][vc_column][vc_row_inner equal_height="yes"][vc_column_inner el_class="normal-style"][vc_column_text text_color="#383b3b" font_size="16px" letter_spacing="" el_class="lh22 ptext-justify"]Catalyst conducted a survey⁵ in Jaipur that revealed that over two-fifths of the merchants surveyed had tried some form of digital payments. However, only a third reported sustained use, a fraction of the overall volumes. The most popular payment service was closed loop wallets, chosen by nearly three-fourths of those surveyed. A little less than a third used cards, and about 25 percent used internet banking. Only 8 percent of overall customer transactions by value were executed digitally. Merchants stated a low customer demand as the biggest reason for not using digital payment solutions, followed by a lack of awareness and the fear of being cheated in that order.⁶[/vc_column_text][vc_column_text letter_spacing=""]
<div style="text-align: left;">
<div>These survey findings were in line with common knowledge in this domain that</div>
<div>barriers to adoption of digital financial services are in abundance, more so among the poor in India. Use of cash for payments is a particularly sticky habit, one that has witnessed resurgence after seeing a slight dip in the demonetization aftermath. Several situational and behavioral factors play a role here. Through extensive desk research and our work across various use-cases, we identified the following key barriers to adoption of digital financial services -</div>
<div>
<ol>
 	<li>habit of using cash and inertia towards non-cash methods</li>
 	<li>lack of compelling value propositions to change</li>
 	<li>limited access to mobile phones and the internet coupled with infrastructural barriers such as poor network connectivity and irregular electricity</li>
 	<li>low levels of digital literacy and perceived complexity of using digital platforms</li>
 	<li>lack of trust in digital services, with fears of fraud and hidden charges;</li>
 	<li>limited acceptance of digital infrastructure by local merchants is both an access and usage barrier. This is often common with new consumers, especially when the interface is cumbersome, or the transaction experience is not smooth owing to poor connectivity or confusing instructions. During the initial trial phase, trust placed in the platform is quickly revoked and the customer reverts to cash.</li>
</ol>
</div>
</div>
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<div>
<div>
<div>Active field work and continuous monitoring of data enabled identification of key focus areas, and factors that were working and non working in improving DFC in each of the ecosystems. For illustrative purposes, we have listed in Table 1 the key triggers and barriers at every step of the journey that led to the DFC nudges in Bhatta Basti. More details of our work in Bhatta Basti can be found in Annex 1a.</div>
</div>
</div>
[/vc_column_text][vc_column_text letter_spacing=""]⁵See: Mapping the Merchant’s Mind: An analysis of digital payments behaviors by fixed store merchants in Jaipur, Malick, Badal and Rajesh Shukla, PRICE-Catalyst report 2018 &lt;<a href="https://cashlesscatalyst.org/wp-content/uploads/2018/07/Price-Report-Short-20-June-edited-min.pdf">https://cashlesscatalyst.org/wp-content/uploads/2018/07/Price-Report-Short-20-June-edited-min.pdf</a>&gt;⁶ Price-CATALYST report 2018, Malick, B. and R. Shukla, ibid.
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<div>
<div style="text-align: center;">Table 1: Illustrative box on triggers and barriers identified for digital financial inclusion journey in Bhatta Basti</div>
</div>
[/vc_column_text][kleo_gap][vc_column_text letter_spacing=""]

<style>
table {border-collapse: collapse;}table, td, th {border: 1px solid black;} .red {color:#E83355; text-align:center;} th{text-align:center;} td {padding:1rem;}<br />
</style>
<table>
<tbody>
<tr>
<th>Stages of adoption</th>
<th>Triggers</th>
<th>Barriers</th>
</tr>
<tr>
<td class="red">Awareness and Consideration (Bank Accounts)</td>
<td>Value propositions of benefits and advantages of savings and banking</td>
<td>Little awareness about benefits of savings and bank accounts</td>
</tr>
<tr>
<td class="red">Adoption of bank accounts</td>
<td>Improved awareness and financial capability - how to use financial sources, whom to trust and what information must not be shared</td>
<td>
<ul>
 	<li>Lack of trust - refusal to open bank accounts due to prior experience with the cases of fraud</li>
 	<li>Documentation issues - Documents unavailable in case of migrant members, problems associated with Aadhaar card</li>
</ul>
</td>
</tr>
<tr>
<td class="red">Active Banking</td>
<td>
<table>
<tbody>
<tr>
<td>Connecting financial inclusion to education inclusion, health inclusion etc. For example. many families wanted to avail of scholarships for their children upon opening bank accounts</td>
</tr>
<tr>
<td>Youth /educated member in the family were often consulted for advice on financial matters. Thus, increased efficacy towards digital financial capability among youth would have a positive influence</td>
</tr>
</tbody>
</table>
</td>
<td>
<table>
<tbody>
<tr>
<td>Lack of clear value proposition for financial inclusion</td>
</tr>
<tr>
<td>
<ul>
 	<li>Lack of trust, particularly amongst women in Bhatta Basti, about the safety of money in bank accounts</li>
 	<li>Low confidence in safekeeping of debit cards and making digital payments</li>
</ul>
</td>
</tr>
</tbody>
</table>
</td>
</tr>
<tr>
<td class="red">Awareness and Consideration (Digital Payments)</td>
<td>
<ul>
 	<li>Awareness about usage and how to keep accounts secure,</li>
 	<li>Incentive</li>
</ul>
</td>
<td>
<ul>
 	<li>Most did not have smartphones</li>
 	<li>Little awareness, exposure or familiarity with banking and mobile payment operations/ instruments and its perceived complexity</li>
 	<li>Lack of trust in safety associated with digital transactions</li>
 	<li>No interest or motivation in using non-cash modes of payment</li>
</ul>
</td>
</tr>
<tr>
<td class="red">Adoption of digital payments</td>
<td>
<ul>
 	<li>Aspirational imagery of being with the times (mostly youth)</li>
 	<li>Convenience (mostly working men)</li>
</ul>
</td>
<td>
<ul>
 	<li>Network issues - lack of access to internet in many parts of Bhatta Basti</li>
 	<li>Time and distance factor for the process of on-boarding</li>
 	<li>Varied technical glitches and problems</li>
</ul>
</td>
</tr>
<tr>
<td class="red">Active usage of digital payments</td>
<td>Adoption of digital payment solutions such as AEPS, UPI etc. by merchants, e-mitras and vendors in Bhatta Basti</td>
<td>
<ul>
 	<li>Lack of reliable and consistent network</li>
 	<li>No clear benefit seen over cash payments</li>
 	<li>Absence of regular and trusted merchants and vendors on these platforms</li>
</ul>
</td>
</tr>
</tbody>
</table>
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<div>
<div>Once the gaps and opportunities within each user segment were identified, our efforts were directed towards answering two critical questions: where should the digital financial solutions operate (in the user journey) and what is the value gap that they will address? This is the step at which targeted solutions to address the gaps and the relevant behavioral nudges emerged.</div>
<div>While designing the DFC nudges and choosing various channels for its delivery, we ensured a mix of value propositions for both the merchants as well as the end-consumers – that addressed various stages of adoption. The decision on the channels and the value propositions we communicated were based on –</div>
<div><strong>a. Profile of the target group–</strong> We based our decisions of channels on the knowledge about smartphone ownership and social media usage of the merchants and end-consumers. A majority of the merchants owned a smartphone and had a presence on social media. In Bhatta Basti, less than half of the population owned smartphones.</div>
<div><strong>b. Stage of adoption and triggers/barriers–</strong> Both merchants and end-consumers are at different stages of adoption. While some were open and willing to transact digitally, they did not have the ability; others were not even aware of digital payment options. Therefore, in some cases, the solution needed to increase awareness and invoke interest while, in others, the solutions needed to begin with getting the end-consumer onboarded onto the platform and then take them forward. Further, our communication through these channels was based on the triggers and barriers identified through our field work. An illustration of the triggers and barriers across the dairy merchants’ adoption journey is provided in Table 2.</div>
</div>
[/vc_column_text][vc_column_text letter_spacing=""]
<p style="text-align: center;">Table 2: Illustrative information on triggers and barriers identified for adoption of digital payment solutions by dairy merchants</p>
[/vc_column_text][vc_column_text letter_spacing=""]
<p style="text-align: center;"><style>
table {border-collapse: collapse;}table, td, th {border: 1px solid black;} .red {color:#E83355; text-align:center;} th{text-align:center;} td {padding:1rem;}<br />
</style></p>

<table>
<tbody>
<tr>
<th>Stages of adoption</th>
<th>Triggers</th>
<th>Barriers</th>
</tr>
<tr>
<td class="red">Engaged but not adopted</td>
<td>
<ul>
 	<li>Value proposition of direct money transfer to bank account increases security and eases services like bill payment, account-to-account money transfer.</li>
 	<li>Perception of digital payments to be an inevitable future.</li>
</ul>
</td>
<td>
<ul>
 	<li>Technical difficulties of using correct phone version, bank account type, etc.</li>
 	<li>Perceived time and complexity of a digital transaction.</li>
 	<li>Lack incentive to undertake extra effort in terms of daily bank visit to digitize income and opportunity cost of time, fuel and business loss.</li>
</ul>
</td>
</tr>
<tr>
<td class="red">Engaged and adopted</td>
<td>
<ul>
 	<li>Direct money transfer and increased security.</li>
 	<li>Helped retailers in credit building.</li>
</ul>
</td>
<td>
<ul>
 	<li>Lack of customer interest in digital payments.</li>
 	<li>90% of the non-cash customers use wallets, and show resistance to UPI adoption.</li>
 	<li>Lack incentive and opportunity cost of bank visit.</li>
</ul>
</td>
</tr>
<tr>
<td class="red">Active user</td>
<td>
<ul>
 	<li>Allow retailers to pay at convenience with no dependency on distributor’s cash collector.</li>
 	<li>Hassle-free accounting.</li>
 	<li>Direct money transfer.</li>
</ul>
</td>
<td>
<ul>
 	<li>Network connectivity issues.</li>
 	<li>Commission charges of digital payment service providers diminish the already thin dairy margins.</li>
</ul>
</td>
</tr>
</tbody>
</table>
[/vc_column_text][vc_column_text letter_spacing=""]
<div>
<div>c. Familiarity and trust with channel: It is very important to select a channel that the customers are familiar with and trust completely. This is also true of the change agents or influencers who introduce them to the solutions.</div>
<div></div>
<div>Based on the above, the various channels that CATALYST used to communicate value propositions and improve DFC of the customers across ecosystems are presented in the matrix in Figure 4.</div>
</div>
[/vc_column_text][vc_column_text letter_spacing=""]
<p style="text-align: center;">Table 3: Channels used to present DFC value proposition</p>

<table>
<tbody>
<tr>
<th></th>
<th>eMitras</th>
<th>Dairy</th>
<th>Bhatta Basti</th>
</tr>
<tr>
<td class="red">Merchant-facing</td>
<td>
<ul>
 	<li>Interactive Voice Response System (IVRS) for knowledge dissemination</li>
 	<li>WhatsApp group for peer-to-peer influence and nudge</li>
 	<li>Capacity building of eMitra agents</li>
</ul>
</td>
<td>
<ul>
 	<li>IVRS for knowledge dissemination</li>
 	<li>WhatsApp group for peer-to-peer influence and nudge</li>
 	<li>Capacity building of dairy merchants</li>
</ul>
</td>
<td></td>
</tr>
<tr>
<td class="red">Consumer-facing</td>
<td>
<ul>
 	<li>Flyers at points of sale</li>
 	<li>Incentives</li>
 	<li>Personal handholding for onboarding</li>
</ul>
</td>
<td>
<ul>
 	<li>Flyers at points of sale</li>
 	<li>Personal handholding for onboarding</li>
</ul>
</td>
<td>
<ul>
 	<li>Facebook awareness video</li>
 	<li>Digital mela for awareness and onboarding (with distribution of visual collaterals like comic books, flyers)</li>
 	<li>WhatsApp group moderated by change agents of the community</li>
 	<li>Personal handholding for onboarding</li>
</ul>
</td>
</tr>
</tbody>
</table>
[/vc_column_text][vc_custom_heading text="FOR MERCHANTS (DAIRY AND EMITRA)" font_container="tag:h2|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]<strong>Toll-free IVRS: </strong>

To bring merchants onboard digital solutions and prompt them advocate them to their customers, we felt that the first step was to increase their knowledge about the different options available. Towards this end, an IVRS was set up to provide information to merchants over phone about various payment options and how to use them. The merchants could call in at the number at any time, free of cost, and get information on any digital payment solution they were interested in. We had spread awareness about the IVRS number within the top 500 eMitra entrepreneurs based in Jaipur as well as the dairy retailer network of the onboarded distributors of the dairy digitization project.

<strong>a. What worked?</strong>
Anybody could call at the toll-free number (it did not have to be a smartphone user) at their own convenience to acquire knowledge about any solution that they were interested in. The purpose of the IVRS was clear to the merchants and it successfully assuaged trust issues by establishing association with the Government of Rajasthan; the voice quality was appreciated; the information flow and navigation were considered easy.

<strong>b. What didn’t work?</strong>
It is too early a stage for merchants to call proactively. The precursor to evoking merchants’ interest in a solution like this is to first increase consumer uptake for digital payment solutions which would act as the push. Furthermore, merchants who accessed the IVRS felt that there was information overload and, due to their other work, they could not give so much time to the IVRS.[/vc_column_text][vc_column_text letter_spacing=""]
<div>
<div>Since merchants have very little active interest in digital payments right now, channels such as IVRS where they need to call by themselves might not work unless there is a clear incentive or direct link with increase in business. Even at a stage where merchants are ready and willing to access IVRS, the format needs to be trusted, easy, engaging and, most importantly, backed by support, with a follow up SMS or WhatsApp message This will serve as a ready reckoner and have the link to a customer support number to pose further queries to.</div>
</div>
[/vc_column_text][vc_custom_heading text="WhatsApp group of merchants:
" font_container="tag:h2|font_size:26px|text_align:left|color:%23383b3b|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]
<div>
<div>We created and moderated a WhatsApp group of 20 merchants with the idea of offering the merchants a platform to share their experiences and challenges with others like them. We used WhatsApp as all the merchants were familiar with and already using the app. It also allowed easy sharing of multimedia such as images, videos, etc. We shared information on the benefits of digital payments such as convenience of instant bank-to-bank transfers, no need for loose change, etc. The idea was to inspire them to go digital and then leave them with a channel that does not require moderation from a third party but is sustainable through their own information sharing. WhatsApp was the merchants’ preferred mode to receive information on digital payments as they use it extensively and find it non-intrusive.</div>
</div>
[/vc_column_text][vc_column_text letter_spacing=""]<strong>a. What worked?</strong>
WhatsApp was the merchants’ preferred mode to receive information on digital payments as they use it extensively and find it non-intrusive.

<strong>b. What didn’t work?</strong>
Low interest in digital payments from consumers meant low interest among merchants and hence the WhatsApp group did not show much proactive engagement. The merchants informed us that they preferred videos over texts.[/vc_column_text][vc_column_text letter_spacing=""]
<div>
<div>Therefore, a merchants’ WhatsApp group has the potential to act as a redressal mechanism as merchants can share their experiences and learn from each other, but it may work only at a later stage of digital payments adoption.</div>
</div>
[/vc_column_text][vc_custom_heading text="Interpersonal communication and capacity building of merchants:
" font_container="tag:h2|font_size:26px|text_align:left|color:%23383b3b|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]This was done to ensure that the merchants themselves spread awareness about digital payments, explain their benefits and onboard potential users. They were educated on how it would benefit them as well as their consumers and how it was to be done. Merchants were also given collaterals that taught them about the benefits of various payment methods.

<strong>a. What worked?</strong>
This was an easy method of conveying the benefits and advantages of adopting digital payments and banking. It also helped address the merchants’ needs to understand the process of onboarding their customers.

<strong>b. What didn’t work?</strong>
Personal handholding for every merchant involves a very intensive effort and heavy investment. There is a lot of dependability on the solution providers’ agent and his/her training to be able to make a difference.

One of the key learnings was that not all end-consumers view merchants as a trusted source for financial information so merchants might not be the right catalyst for improving DFC of end-consumers.
[/vc_column_text][vc_custom_heading text="FOR CONSUMERS (DAIRY AND EMITRA)" font_container="tag:h2|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]<strong>Flyers and interpersonal communication at the point of sales:</strong>

To spread awareness about digital payment solutions and their benefits, we placed collaterals on the key value propositions of digital payments at eMitra centers and dairy booths. These were targeted at the digitally-ready audience which would be interested in using digital payments due to the problems of loose change at the dairy booth or the benefit of convenience, in general. They were expected to find the value propositions relevant and ask the merchant for more information. We also provided personal handholding at the dairy booths and eMitra centers to those interested in onboarding onto digital payment solutions. The handholding exercise was undertaken to assist customers with UPI onboarding and to observe and learn from the uptake behavior.

<strong>Example of a consumer-facing dairy collateral that gives the reasons of using digital payments</strong>
[/vc_column_text][vc_single_image image="40268" img_size="full" alignment="center"][vc_column_text letter_spacing=""]<strong>a. What worked</strong>
Flyers are a subtle and non-intrusive way of making consumers aware of the presence of digital payment solutions with the merchant. It encouraged digitally-ready consumers to seek more information through the merchant. Personal handholding worked better to onboard people onto the platform as there are still many technological challenges that people face when accessing the solutions on their own, due to which they give up easily.
<strong>b. What didn't work</strong>
Those who are not already positively inclined towards digital payments do not pay much attention to flyers, but personal talk makes a difference in convincing them. The majority told us they would be motivated by cash backs and rewards to use digital payments, else they were comfortable with cash and saw no reason to shift.[/vc_column_text][vc_custom_heading text="For consumers (Bhatta Basti)" font_container="tag:h2|font_size:26px|text_align:left|color:%23383b3b|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]<strong>Facebook awareness videos: </strong>

To generate initial interest amongst the early adopters of digital payments, we implemented a geo-targeted Facebook campaign in Bhatta Basti to let smartphone users know about digital payments being used in their area and achievements of other people in their communities. These were targeted at youth ambassadors who can influence others in the community and relied on the “network effect” to attract other account holders.

<strong>a. What worked</strong>
Facebook as a medium turned out to be very cost-effective and targeted, with our campaign reaching over a lakh Facebook users (early adopters of technology) in and around Bhatta Basti.
<strong>b. What didn't work</strong>
The profile of smartphone users became the profile of our campaign; 91 percent of the people reached through the Facebook campaign were men and only 9 percent were women.
[/vc_column_text][vc_custom_heading text="Digital mela for consumers across different stages of adoption: " font_container="tag:h2|font_size:26px|text_align:left|color:%23383b3b|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]
<div>
<div>Our research indicated that, in an ultra-poor locality such as Bhatta Basti, onboarding customers onto digital payment platforms required the highest degree of in-person handholding, particularly for the initial set of transactions. Hence, it was important to find economical ways of deploying this handholding and our digital mela in Bhatta Basti (in October 2018) was such an attempt. At the mela, we provided two main kinds of services:</div>
</div>
[/vc_column_text][kleo_gap][vc_column_text letter_spacing=""]
<div>
<div>i. Information about Automated Teller Machine (ATM) PIN generation; and</div>
<div>ii. Handholding support for UPI onboarding (downloading and registering).</div>
</div>
[/vc_column_text][vc_column_text letter_spacing=""]
<div>
<div>For spreading awareness about the mela, we identified those youngsters who were already making digital payments and recruited them for our work. We called them ‘Digital Champions’ and they were supposed to encourage and get their peers to the mela. The mela helped build customer capability in an interesting manner through role plays and comic books, etc. We distributed various comic books on ATM pin generation, AEPS and advantages and usage of UPI among people of different ages and with varying levels of digital and financial awareness in Bhatta Basti. (An example of a comic book on UPI is shown below).</div>
</div>
[/vc_column_text][vc_single_image image="40269" img_size="full"][vc_column_text letter_spacing=""]Link to full comic book: UPI full comic book
<div></div>
[/vc_column_text][vc_column_text letter_spacing=""]<strong>a. What worked?</strong>
The 'Digital Champions’ helped us reach out to their peers in their communities in a very targeted and effective way. The digital mela proved to be a good mode of creating awareness and spreading knowledge on UPI services. Sixty-two percent of the attendees said they learnt about the advantages of using UPI and 46 percent said they started transacting using UPI. Comic books were seen as fun and they cut through demographics and gender in their appeal.
<strong>b. What didn't work?</strong>
Footfall was male dominated (92 percent) possibly due to the mela being in central market. In order to reach out to more women, a more central location could be chosen. Many felt that the language used in the comic books should have been simpler and easy to understand, and there should have been more pictures and illustrations.[/vc_column_text][vc_custom_heading text="WhatsApp group for individuals: " font_container="tag:h2|font_size:26px|text_align:left|color:%23383b3b|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]
<div>
<div>Over the course of four months, we created and moderated two WhatsApp groups in Bhatta Basti to spread digital financial awareness: one for men and one for women. We realized that we could not have both men and women in the same group due to the cultural context of Bhatta Basti. The WhatsApp group of male members comprised young, early adopters of UPI (whom we called ‘Digital Champions’) while that for females consisted of women in the community (who were at different points in the digital user journey). The Digital Champions were identified as change agents of their community and helped us spread awareness about digital financial inclusion in their community. The WhatsApp group of community women was to encourage the general population of women to discuss their experiences with digital financial services and learn from each other.</div>
</div>
[/vc_column_text][vc_column_text letter_spacing=""]<strong>a. What worked?</strong>
WhatsApp can be successfully used as a redressal mechanism platform and can be a good channel for early adopters.
<strong>b. What didn't work?</strong>
Building DFC of people at earlier parts of the user journey may require other forms such as personal handholding rather than WhatsApp. One of the most important takeaways for us was that it was crucial to have a moderator for each group who ensured regularity and quality of the content that is being shared. Further, it was crucial to have an incentive structure (value proposition) for the moderator to ensure active participation of all members. One of the problems we faced was sharing of unrelated information and fake news forwards. Having the moderator put together a set of rules and regulations is very important.[/vc_column_text][vc_column_text letter_spacing=""]
<div>
<div>The specific DFC nudges and channels devised by us are detailed under the respective ecosystem sections in this paper.</div>
</div>
[/vc_column_text][/vc_column][vc_column][kleo_gap][vc_custom_heading text="6. KEY INSIGHTS AND RECOMMENDATIONS FROM CATALYST’S PILOTS BY STAGES OF ADOPTION" font_container="tag:h2|font_size:26px|text_align:center|color:%23ffffff|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing="" el_class="normal-style "][kleo_gap][/vc_column][/vc_row][vc_row type="image" enable_parallax="false" padding_top="150" padding_bottom="150" inline_style="font-style: normal;"][vc_column][vc_column_text letter_spacing=""]<strong>Initial stage to make customer interested in digital payments – improving customers’ awareness and consideration for digital solutions</strong>[/vc_column_text][vc_column_text letter_spacing=""]<strong>a.</strong> A major problem that we faced during our experiments was communicating a clear value proposition on digital financial inclusion.

In-depth interviews with our customers during pilots suggested that the convenience or speed of making or receiving digital payments is not a big pull for the low- to middle-income class to make a shift from cash to digital. Unless a strong value proposition exists, expecting consumers to make the journey from being aware to actively seeking knowledge and adopting will not happen.

For digital financial inclusion to resonate with customers, its “benefits to self” need to be strongly linked with people’s personal aspirations – both merchants’ as well as consumers In the same light, for encouraging digital payments, it is very important for the incentives to be clear and attention-catching, for example, the eMitra incentivization model was found to be too complex to be able to motivate the merchants.

<strong>b.</strong> One of the biggest barriers to adoption is that there is a perceived risk to one’s money due to mistrust in using technology for finances. There is also a lack of confidence in the privacy of personal data. Coupled with this is the problem of frauds in urban slum clusters, as we found out in Bhatta Basti where a few people posing as solution providers had robbed people of their money. Similar experiments aimed at improving financial capability of women from low-income segments, such as with the Grameen Foundation,⁷ have shown that the use of a trust-worthy person (a front-line worker in this case), who happens to be an influencer in financial solutions, goes a long way in making women act positively.

Qualitative insights suggest that trust plays a very big factor in financial decisions of any kind including decisions on using digital financial payments. Hence, network analysis, i.e., following one’s friends and family, emerged as one of the most important triggers for digital financial inclusion.[/vc_column_text][vc_column_text letter_spacing=""]Lack of trust in digital payments is also a result of initial teething problems with nascent technologies. Many times, during our experiments, we observed problems of a slow network and consumers dropping off during the process of onboarding. It is important for the technology solution to offer the user a seamless experience as initial teething problems with UPI or AEPS platforms often compels consumers to question the proposition of convenience in digital.

Building trust with the platform at the initial stage can go a long way in getting more customers on board. This can be done in various ways:

<strong>i.</strong> By reaching out to the customers through their trusted channels, i.e., friends and family who are more familiar with financial inclusion;
<strong>ii.</strong> At the same time it is important to ensure the presence of a trusted authority such as a bank representative at the time of onboarding or during awareness camps; and
<strong>iii.</strong>Financial service providers should be transparent about problems that a user might face in the adoption journey, so that there is no lack of confidence in the solution later.

<strong>c.</strong> Consumers are not just at different stages of adoption of digital financial solutions but also at different stages of financial inclusion and technology familiarity. Taking a low-income individual, who may or may not have bank accounts to begin with, on the route to digital financial inclusion is a long-drawn process requiring sustained interventions. It is, therefore, very important to identify the early adopters of digital payments, i.e., those who are comfortable with technology and actively banking or maybe have a debit card and shift them first to digital payment platforms. They can then become the change agents for their families and communities. This also ensures that communication to the majority takes place through their trusted sources.
<strong>c(i).</strong> Across ecosystems, it was noticed that customers who were more familiar with technology in general were more open to digital payments and did not have trust issues.
These were mostly middle-aged working men who had bank accounts linked to Aadhaar cards or the younger people in the family with smartphones for whom making digital payments was aspirational.
<strong>c(ii).</strong> Once these early adopters start using digital payments, they can help build financial capability within their families and peers. It is this positively inclined subset that can act as catalyst for digital payments within their networks; and
<strong>c(iii).</strong> We found in our pilots that these people in the family are also more active on social media (WhatsApp and Facebook) and can be targeted through these channels.

<strong>Next stage to improve knowledge and shift attitudes toward digital solutions</strong>
<strong>d.</strong> Currently, merchants see no reason for asking consumers to change their habit of using cash. The benefits for merchants, such as a smaller number of trips to banks, or convenience for both parties are not enough for changing a sticky habit. Both dairy retailers as well as eMitra entrepreneurs from our pilots suggested that they were willing to invest time in learning more about a digital payments solution provided consumers ask for it and it improves their business/ sales. In our survey with merchants, 55 percent of fixed store merchants cited ‘low consumer demand’ among the top reasons for non-adoption of digital payments at their shop. A case in point: a lack of intent from end-consumers resulted in little encouragement for merchants to dig deep about various solutions and this was evident in the poor uptake of the IVRS, set up as an information bank for merchants.

CATALYST conducted a merchant survey⁸ in Jaipur in which 64 percent of fixed store merchants and 57 percent of home-based businesses mentioned that the biggest trigger for them to go digital would be an increase in sales or footfalls, and not easier and faster modes to get paid or for recording transactions. Improvement in efficiency of payments and recoding of transactions is not as important for them to make the shift. The merchants are hungry for growth and unless the benefits of advocating digital payments to their consumers are linked to their aspirations, they do not see much value in going digital at present.
[/vc_column_text][/vc_column][/vc_row][vc_row type="image" bg_color="#c9213b" enable_parallax="false" padding_top="150" padding_bottom="150" inline_style="font-style: normal;" bg_image="40098"][vc_column][kleo_gap][vc_row_inner][vc_column_inner][vc_custom_heading text="ANNEX 1: DETAILS OF OUR WORK FROM EACH ECOSYSTEM" font_container="tag:h2|font_size:26px|text_align:center|color:%23ffffff|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing="" el_class="normal-style "][/vc_column_inner][/vc_row_inner][kleo_gap][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading text="1a. Bhatta Basti" font_container="tag:h2|font_size:26px|text_align:left|color:%23383b3b|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]
<div>
<div>Our research study in Bhatta Basti indicated that low-income households of Bhatta Basti largely relied on cash-based payments and depended on their social network for financial advice and borrowing/saving activities. Despite being prominent in the urban city of Jaipur, Bhatta Basti lacked adequate internet network, smartphones, Point of Sale (PoS)/mobile PoS machines that limited the adoption of digital payment solutions by households.</div>
<div>This highlighted the need for a step-wise approach of first educating consumers about the basic tenets of account opening, helping open accounts for use, and then introducing them to the concept of digital financial payments and solutions. Given the diversity in financial behaviors, attitudes and adoption of financial services, we realized that customized interventions had to be designed for people at different stages of the user journey.</div>
<div>The user journey in Bhatta Basti was broadly categorized in the following stages to design nudges:</div>
</div>
[/vc_column_text][kleo_gap][vc_single_image image="40272" img_size="full" alignment="center"][kleo_gap][vc_column_text letter_spacing=""]
<div>
<div>Our understanding of the target group, their triggers and barriers towards financial inclusion led to the development of the following DFC levers and initiatives.</div>
</div>
[/vc_column_text][vc_custom_heading text="DFC NUDGES TO ENABLE UPTAKE OF DIGITAL PAYMENT SOLUTIONS" font_container="tag:h2|font_size:26px|text_align:left|color:%23383b3b|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]
<div>
<div>Based on the above barriers and triggers, we devised behavioral nudges that could be used to increase DFC of people at each of these stages.</div>
</div>
[/vc_column_text][vc_custom_heading text="STAGES 1, 2 and 3, i.e., awareness of bank accounts to active banking" font_container="tag:h4|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]
<div>
<div>We collaborated with SEWA Bharat⁹ and FIA[2] which helped us in community mobilization and implementation, respectively. We set up financial literacy camps where we used official collateral to disseminate information about the importance of savings and informed the audience about how the creation of bank accounts can help in the process. Besides this, we also conducted door-to-door lead generation campaigns and encouraged people to open bank accounts while simultaneously informing them about the associated benefits. Further, FIA helped us set up Customer Service Points (CSPs) to help bring bank facilities closer to their doorsteps. We also distributed collaterals and conducted camps to aid people in the task of opening bank accounts.</div>
</div>
[/vc_column_text][vc_custom_heading text="STAGES 4, 5 and 6, i.e., awareness of digital payments to active usage of digital payments" font_container="tag:h4|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]Our initial research indicated that the task of onboarding people onto digital platforms to make payments required a great degree of handholding in Bhatta Basti. To constantly build people’s DFC, we undertook various approaches ranging from interpersonal communication such as door-to-door handholding, camps at common places to mass communication in Bhatta Basti through Facebook. We planned to generate initial interest amongst the early adopters through Facebook and community youth ambassadors and relied on the “network effect” to attract other account holders.
While the Facebook campaign geo-targeted the whole of Bhatta Basti and included digitally-savvy merchants and representatives from SEWA talking about benefits of digital payments, we separately personally targeted our 619 new account holders. These account holders were divided in tiers based on their self-efficacy and stage of adoption and we customized our nudges according to these tiers:
<strong>I. Tier 1:</strong> those who had taken the initiative to generate an ATM PIN on their own. This segment had the highest self-efficacy and was identified as the early adopters of digital payments. For this segment, we conducted individual handholding sessions as well as distributed collaterals and comic books to promote UPI, AEPS and digital saving platforms. We created a WhatsApp group for some of these on which we shared collaterals and information videos.
Link to full comic book: AEPS Comic book full

<strong>I. Tier 2:</strong> those with accounts but needed help to generate the ATM PIN. We set up ATM PIN generation camps for these individuals.
<strong>II. Tier 3:</strong> those who did not have an ATM card. Here, we worked with CSPs to track the ATM cards and ensured that we got these to the account holders. This segment was also given education on uses and benefits of digital payment solutions.
<strong>III. Tier 4:</strong> the rest whom we could not reach
[/vc_column_text][kleo_gap][vc_single_image image="40270"][kleo_gap][vc_column_text letter_spacing=""]
<div>
<div>Besides the above, we also actively used social media for increasing people’s DFC. We implemented an ecosystem wide geo-targeted Facebook campaign to let people know about our work and to inform them about the behaviors and achievements of other people in their communities. This campaign was aimed at increasing awareness of the target population and encouraging them to become users of digital payment solutions.</div>
</div>
[/vc_column_text][kleo_gap][vc_custom_heading text="1b. Dairy" font_container="tag:h4|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]
<div>
<div>Dairy, a sector that has high frequency, small-value purchases and is facing the problem of loose change during PoS transactions, emerged as a good target point to influence merchant-consumers interaction on digital payments. The idea was that once the retailers and end-consumers understand the benefits of digitization and adopt it, it would complete the cycle of dairy digitization. We first undertook research to understand the stages of adoption across retailers and consumers, and the triggers and barriers at each stage. Our communication solutions had to address these barriers and use the value propositions that hit a chord with the early adopters.</div>
<div>Triggers and barriers in digital payment solutions’ adoption for dairy retailers -</div>
<div>Refer to Table No. 2 in the report.</div>
</div>
[/vc_column_text][vc_column_text letter_spacing=""]
<p style="text-align: center;">Table 4: Triggers and barriers in digital payment solutions’ adoption for dairy consumers</p>
[/vc_column_text][vc_column_text letter_spacing=""]
<p style="text-align: center;"><style>
ul{  list-style: disc}<br />
</style></p>
Not Aware
<ul>
 	<li>Little awareness, exposure or familiarity with banking and mobile payment.</li>
 	<li>operations/instruments and their perceived complexity.</li>
 	<li>Purchase of food/daily grocery items is led by women, most of whom did not have smartphones.</li>
 	<li>No habit of carrying cards while shopping, especially for small purchases, resulting in low possibility of handholding them in the use of an app or a digital payment service.</li>
 	<li>Perception of mobile applications being too complicated.</li>
</ul>
<table>
<tbody>
<tr>
<th>Stages of adoption</th>
<th>Triggers</th>
<th>Barriers</th>
</tr>
<tr>
<td class="red">Aware but not adopted</td>
<td>
<ul>
 	<li>Working population comparably more familiar with banking operations/instruments and mobile applications owing to exposure at the work place.</li>
 	<li>Acknowledge that biometric payment method is suitable for those without smartphone access or those who find use of mobile-based applications too complicated.</li>
</ul>
</td>
<td>
<ul>
 	<li>No habit of carrying cards while shopping, especially for small purchases, resulting in low possibility of handholding them in the use of an app or a digital payment service.</li>
 	<li>Customers had not seen any indication that the merchant accepts digital payments, and had come prepared to pay in cash.</li>
 	<li>Perception of mobile applications being too complicated.</li>
</ul>
</td>
</tr>
<tr>
<td class="red">Engaged but not adopted/adopted</td>
<td>
<ul>
 	<li>Acknowledge that digital payments will help tackle the problem of carrying loose change for the small purchases.</li>
 	<li>Acknowledge that the biometric payment method is suitable for those without smartphone access or those who find use of mobile-based applications too complicated.</li>
</ul>
</td>
<td>
<ul>
 	<li>No interest or motivation in using non-cash modes of payment, at least for these smaller ticket sizes. Consumers felt that the proposition of having digital financial transactions makes better sense at supermarkets and relatively bigger stores than dairies</li>
 	<li>The lengthy onboarding process to get a UPI ID seen as a deterrent since it was compared with the ability to pay in cash instantly</li>
 	<li>Lack of trust on the merchant, given low awareness and knowledge and consequent dependency on the merchant for making digital transactions</li>
</ul>
</td>
</tr>
</tbody>
</table>
[/vc_column_text][/vc_column][/vc_row][vc_row type="image" bg_color="#c9213b" enable_parallax="false" padding_top="150" padding_bottom="150" inline_style="font-style: normal;" bg_image="40098"][vc_column][kleo_gap][vc_row_inner][vc_column_inner][vc_custom_heading text="DFC NUDGES TO ENABLE UPTAKE OF DIGITAL PAYMENT SOLUTIONS" font_container="tag:h2|font_size:26px|text_align:center|color:%23ffffff|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing="" el_class="normal-style "][/vc_column_inner][/vc_row_inner][kleo_gap][/vc_column][/vc_row][vc_row][vc_column][vc_column_text letter_spacing=""]
<div>
<div>What clearly emerged from the data was that the main fracture in the user journey was from the awareness and engagement to adoption stage. Therefore, the key task for CATALYST was to develop easy to operate solutions for retailers and consumers and back these up with awareness and trial generation opportunities supported by extensive handholding. Thus, emerged the following DFC levers for retailers and consumers.</div>
</div>
[/vc_column_text][vc_custom_heading text="Awareness stage" font_container="tag:h4|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]
<div>
<div>We created collaterals for our field team that could be used to educate the retailers about the key benefits of digital payments platform, i.e., direct bank-to-bank transfer, hassle-free accounting, convenience. We also created collaterals for the end-consumers to educate them about the presence of digital payment options at the dairy and the key value of ‘no hassle of loose change for every transaction’. We tried to create an aspirational image around digital transactions for both retailers and consumers through our collaterals. These customer facing posters, in vernacular text, were put up at visible spots at the dairy booths to inform consumers about the provision and benefits of digital payment services.</div>
</div>
[/vc_column_text][kleo_gap][vc_column_text letter_spacing=""]
<div>
<div>For the retailers, we had also formed WhatsApp groups to create a buzz and for them to discuss their experience with digital payments. We also shared our IVRS number with all to empower them with knowledge on various solutions, as and when they need it.</div>
</div>
[/vc_column_text][kleo_gap][vc_custom_heading text="Awareness stage" font_container="tag:h4|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]
<div>
<div>To identify which payment solution works best for merchants and end-consumers, we experimented with different solutions at different booths – while some retailers were offered QR scan solutions, some could go for khaata (maintain digital accounts) solutions while others were asked to try biometric solutions.</div>
</div>
[/vc_column_text][kleo_gap][vc_column_text letter_spacing=""]
<div>
<div>Alongside the provision of solutions and the awareness collaterals, we deployed our field team for interpersonal communication with retailers and consumers. They gave a demonstration to merchants on application downloading, account-setting, pin setting and on how to handhold the consumers.</div>
</div>
[/vc_column_text][kleo_gap][vc_column_text letter_spacing=""]
<div>
<div>The implementation of nudges and solutions is being followed up by rigorous monitoring and field visits so that we can learn from different experiments and levers used.</div>
</div>
[/vc_column_text][kleo_gap][vc_single_image image="40271"][kleo_gap][vc_custom_heading text="Learnings" font_container="tag:h4|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic" letter_spacing=""][vc_column_text letter_spacing=""]
<ul style="list-style: disc;">
 	<li>Printed collaterals were provisioned at dairy retail outlets guiding customers to make digital payments, but it was noticed that customers do not spend a lot of time at the dairy booth and make quick transactions. This leaves very little room for deliberation on the payment method. Even among digital payment options, customers prefer to pay with mobile wallets because of their familiarity with them.</li>
 	<li>Even after the campaign information was provided through consumer handholding, we saw 86 percent selecting cash payment over digital payments. The primary reason for the choice of cash was the small value of transaction. One-third said they had already got cash for the transaction, 30 percent said they were not interested in digital payments in general, and 43 percent respondents said they might consider digital payments for dairy transactions in the future.</li>
 	<li>Though about 70 percent respondents had a smartphone and two-third of those were using internet on it, UPI still lagged mobile wallets and debit cards in terms of popularity. Similarly, almost all respondents had Aadhaar cards (99 percent) and four of five even reported it being linked to their bank account, yet we saw teething problems of operational hurdles (OTP, fingerprint, Aadhaar number) and trust factor deter usage of Aadhaar linked payments.</li>
 	<li>The majority said they were motivated by cash backs and rewards to use digital payments, with only one-third reported continuing with digital payments.</li>
</ul>
As for the WhatsApp group created with 20 dairy retailers, it did not seem to have the expected traction as a platform for peer-to-peer learning. We nudged group members with relevant information on digital payments. The uptake on the WhatsApp group was not very encouraging as most of the merchants remained inactive. They showed low interest in digital payments and did not feel the need to learn as most transactions at their dairy booths are still being made in cash.[/vc_column_text][/vc_column][/vc_row][vc_row type="image" bg_color="#c9213b" enable_parallax="false" padding_top="150" padding_bottom="150" inline_style="font-style: normal;" bg_image="40098"][vc_column][kleo_gap][vc_row_inner][vc_column_inner][vc_custom_heading text="EMITRA" font_container="tag:h2|font_size:26px|text_align:center|color:%23ffffff|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing="" el_class="normal-style "][/vc_column_inner][/vc_row_inner][kleo_gap][/vc_column][/vc_row][vc_row][vc_column][vc_column_text letter_spacing=""]The eMitra entrepreneur’s account with the government acts as a prepaid account, with the amount in it reducing after every cash transaction made by the customer. The average transaction value varies from INR 300 to INR 2,000 for eMitra centers and the customer pays a fee for all the eMitra services except utility bill payments which constitute about 50-75 percent of the total transactions. Given that 98 percent of these transactions are made in cash at the eMitra centers, maintaining the balance in the account is critical for the entrepreneurs to do business.

<strong>Now, if a customer is encouraged to pay digitally, the amount will get credited directly into the government’s account and the eMitra need not require a balance in the prepaid account. However, when we were exploring the eMitra use case, we noticed numerous challenges:</strong>
<ul style="list-style: disc;">
 	<li>While the Government of Rajasthan had rolled out the eMitra web portal to encourage digital payments, the Merchant Discount Rate (MDR) charges that were being passed on to the customers acted like a disincentive for them;</li>
 	<li>The eMitra model of requiring entrepreneurs to deposit money upfront reduced the risk for the government and enabled digital payments from the entrepreneur to the government but it also created the burden of working capital for the entrepreneur; and</li>
 	<li>The eMitra centers with high rate of transactions could be losing business due to the time taken to digitize cash revenue so they could fill up their prepaid account for the next month.</li>
 	<li>Once we identified these challenges, we realized that creating an enabling environment for customers to pay digitally for the eMitra services could resolve all these challenges.</li>
 	<li>We first undertook research to understand the stages of adoption across eMitra entrepreneurs and the triggers and barriers at each stage. Our communication solutions had to address these barriers and use the value propositions that resonated with the early adopters. We conducted interactions with a diverse set of entrepreneurs who we identified based on their digital payment behavior and payments history (volume and value). Based on the interviews, we identified the triggers and barriers (Table 5) along their user journeys to adopt digital payments.</li>
</ul>
[/vc_column_text][vc_column_text letter_spacing=""]
<div>Table 5: Triggers and barriers in digital payment solutions’ adoption for eMitra</div>
<div style="text-align: center;">entrepreneurs</div>
[/vc_column_text][vc_column_text]
<table>
<tbody>
<tr>
<th>Stages of adoption</th>
<th>Triggers</th>
<th>Barriers</th>
</tr>
<tr>
<td>Adoption</td>
<td>
<ul>
 	<li>Reduction in trips to the bank for eMitra entrepreneurs to deposit money</li>
 	<li>Many eMitra entrepreneurs felt that digital payment solutions are inevitable, and they need to move with the times by adopting them and advocating these to their consumers</li>
</ul>
</td>
<td>
<ul>
 	<li>Not applicable for entrepreneurs s as UPI is already integrated into the platform but the barriers were in advocating digital payments to their end-consumers. These were:</li>
 	<li>non-linkage of bank account and mobile numberThere were extra MDRs on transactions for end-customers which was a disincentive for them</li>
 	<li>many customers had trust issues with UPI</li>
</ul>
</td>
</tr>
<tr>
<td class="red">Sustained usage</td>
<td>
<ul>
 	<li>Reduction in the number of trips to the bank for eMitra entrepreneurs to deposit money</li>
 	<li>Zero cost of operating any digital payment method</li>
</ul>
</td>
<td>
<ul>
 	<li>Lack of customers’ interest to pay digitally (UPI) as there was no clear incentive to change a sticky behavior</li>
 	<li>Transaction failures which are either bank related or e-Mitra portal related (PoS device)</li>
</ul>
</td>
</tr>
</tbody>
</table>
[/vc_column_text][vc_column_text letter_spacing=""]
<div>Based on the above, we devised DFC nudges to enhance the digital financial capability of the eMitraentrepreneurs and their end-consumers:</div>
[/vc_column_text][vc_custom_heading text="Merchant handholding and IVRS" font_container="tag:h4|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]
<div>The CATALYST field team spent some time at each eMitra center to assist entrepreneurs with the initial few transactions, to ensure he/she was comfortable in using the solution. Given that UPI was integrated in the eMitra panel by the Department of Information Technology &amp; Communication (DoITC), Government of Rajasthan and PoS machines were provided, entrepreneurs were aware about the solution. The objective primarily was to handhold the entrepreneur and ensure he understands the solution and advocates it to end-consumers too. During this time, the CATALYST team qualitatively observed the eMitra entrepreneurs and their approach to promotion of digital payments to their end-consumers. We tried to learn from the entrepreneurs and their customers about their experience of using digital payments, their perceptions of the benefits, their key concerns and the impact that digital payments can have on their lives.</div>
<div>
<div>We also familiarized all the eMitra entrepreneurs with our IVRS numbers so that they could call in and educate themselves on various digital payment solutions as and when they wanted the information.</div>
</div>
[/vc_column_text][kleo_gap][vc_custom_heading text="Customer handholding" font_container="tag:h4|font_size:26px|text_align:left|color:%23da4a62|line_height:32px" google_fonts="font_family:Roboto%20Condensed%3A300%2C300italic%2Cregular%2Citalic%2C700%2C700italic|font_style:700%20bold%20regular%3A700%3Anormal" letter_spacing=""][vc_column_text letter_spacing=""]
<div>We created collaterals to promote digital payments to the end-consumers of eMitra centers. These highlighted the key value propositions that digital payments offered to the segment and talked about the incentives. The handholding exercise was also undertaken to inform customers, assist with UPI onboarding and observe the behavior of consumers and merchants.</div>
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][/vc_column][/vc_row][vc_row type="color" bg_color="#ffffff"][vc_column][kleo_button title="Download full report" href="https://cashlesscatalyst.org/wp-content/uploads/2019/01/MoT-Learning-Note.pdf" target="_blank" position="center" size="lg" type="boxed-icon" special="no" icon="download" font_size="14px" letter_spacing="" el_class="pkirbtn" icon_custom_background="#d11e3c" icon_custom_text="#ffffff"][/vc_column][vc_column][/vc_column][/vc_row][vc_row el_id="footer_area" text_align="center" type="image" bg_position_horizontal="center" enable_parallax="false" padding_top="50px" padding_bottom="50px" bg_image="7886"][vc_column width="1/4"][/vc_column][vc_column width="1/2" offset="vc_col-lg-offset-0 vc_col-md-offset-0 vc_col-sm-offset-0"][vc_single_image image="7888" img_size="full" alignment="center"][vc_column_text text_color="#ffffff" font_size="14px" letter_spacing="" css=".vc_custom_1484826151396{margin-top: 35px !important;margin-bottom: 5px !important;padding-right: 20px !important;}"]CATALYST is an initiative seeded by an alliance between the Government of India &amp; USAID, to expand digital payments and financial inclusion in India, especially for small merchants and low-income consumers.[/vc_column_text][kleo_gap][vc_column_text letter_spacing="" css=".vc_custom_1484051069491{margin-bottom: 0px !important;}"][email-newsletter-plugin][/vc_column_text][kleo_icon icon="facebook" href="https://www.facebook.com/CashlessCatalyst/" target="_blank" padding="15px" icon_color="#ffffff"][kleo_icon icon="linkedin" href="https://www.linkedin.com/company/13221050?trk=tyah&amp;trkInfo=clickedVertical%3Acompany%2CclickedEntityId%3A13221050%2Cidx%3A2-1-2%2CtarId%3A1476420479247%2Ctas%3Acashless%20catalyst" target="_blank" padding="15px" icon_color="#ffffff"][kleo_icon icon="twitter" href="https://twitter.com/cashlesscatalys" target="_blank" padding="15px" icon_color="#ffffff"][kleo_icon icon="youtube-play" href="https://www.youtube.com/channel/UChuc38_PfawDOu44IfYS4lw" target="_blank" padding="15px" icon_color="#ffffff"][/vc_column][vc_column width="1/4"][/vc_column][/vc_row][vc_row][vc_column][/vc_column][/vc_row][vc_row][vc_column][/vc_column][/vc_row][vc_row][vc_column][/vc_column][/vc_row][vc_row][vc_column][/vc_column][/vc_row]