• Leaving cash with the agent (especially when the system is down or alleged to be down)
b. Transaction data security relates to the privacy of customers’ account/PIN details while conducting transactions at agent locations. Poor transaction data security increases customers’ vulnerability to external frauds. Confusing interfaces and low comfort level with technology add further to poor transaction data security, as the customer is forced to share personal account details.
Two other issues further erode customers’ trust in digital finance in India:
1. Lack of liquidity at the agent is a multi-fold issue. For the customer, it means that their funds are inaccessible and service is denied. A customer who has been refused service by an agent is less likely to transact again at that agent location. Furthermore, loss of business reduces profitability and demotivates the agent, so he starts maintaining minimum (or less) liquidity – thus setting in motion a downward spiral.
2. The perception that funds held digitally are not safe. This stems from rumours which spread in the market from time to time. For example, in 2014, in response to government policy, agents were given a target of 100% withdrawal of government payments to receive their commission from the agent network managers. So, (unsurprisingly) agents communicated that customers must withdraw all their direct benefits immediately or the government would take back the amount left in the account.
These issues are very similar to the ones we found in Bangladesh, Uganda and (to a lesser extent) the Philippines (see graph below).

There are, however, important consequences of these issues and risks for DFS uptake and usage. Fears and perceptions suppress uptake and tarnish the reputation of DFS and its providers. Non users are often very aware of these issues. In the words of one customer, “We keep hearing mobile money users complain about unstable network, delayed service, missing money and many other negative comments about mobile money. Why then should we register for these services?”
There is strong evidence that poor customer service/protection is reducing not just uptake but also usage of DFS services. Many registered customers lapse into inactivity when they find it impossible (due to system downtime or absent/illiquid agents) or too scary (due to the risks of sending money to the wrong number or losing/compromising their PIN) to make transactions. Others choose to self-protect by using OTC services in preference to registering or keeping money in their m-wallets. These all limit the use of digital financial services. This was a repeated theme across the studies and reflects the findings of
InterMedia’s work in eight leading markets across the globe. MicroSave’s recent work for
UNCDF’s MM4P on the customer journey highlighted that, “Moving people from knowledge to trial, and from trial to regular usage, will require providers to address issues that erode trust: system instability, poor customer service; and improve access which is limited by current KYC requirements”.
System downtime and sending money to the wrong number, in particular, seem to damage the reputation of DFS service providers. Ironically, these technological issues can be addressed by providers themselves. Similarly, agent liquidity and overcharging can and should be addressed through effective monitoring by providers and their agent network managers. The future of DFS in India is in the hands the very people that provide these services.
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