Demonetisation, cashless push has crippled urban street vendors

In a little over a month, agricultural prices have crashed. While farmers in Davanagere (Karnataka) threw their tomatoes on the streets in protest, lakhs of workers, especially those engaged in contract daily-wage work, have lost their jobs.

At the same time, politicians such as Janardhana Reddy, Union minister Nitin Gadkari, and other public figures have openly thrown lavish wedding celebrations, spending crores of rupees in the process.

It is now clear that the move towards demonetisation has neither stopped corruption nor circulation of black money – even when it comes to the new notes.  We cannot but doubt the intentions of the central government that this move was to curb black money. The mantra has now switched to the claim that the endeavour was to help India become cashless.

Street vending is an integral part of the urban economy, where the middle class and the urban poor access essential goods and services. Street vendors themselves constitute people of the lower middle class. They are mostly rural migrants who come to cities looking for employment opportunities, and find that street vending gives them the independence of trade, and thus, a good livelihood opportunity.

Vendors are heavily and primarily dependent on cash transactions. They have said that demonetisation has led them to make losses, as many people don’t have cash on them or have higher denomination notes, for which street vendors cannot tender change.

With the demonetisation affecting all middle-class citizens, it has hit street vendors exceptionally hard, who are not only struggling to find loose change for customers, but are being encouraged to go cashless by using debit-credit card swiping machines, digital wallets and Aadhaar-based transactions.

While there is no shortage of techies excited about a historic leap into a new era of enlightenment, for an average Indian, a sober analysis reveals that this move is grossly unfair in a context where street vendors are struggling to earn a decent livelihood on streets.

Note that they must also contend harassment from the police and municipal authorities, with residents coaxing the authorities to evict vendors from the streets. Demonetisation and the move towards a cashless economy has added to their daily woes.

In a recent discussion that was organised by the Bengaluru Jilla Beedhi Vyaapaari Sanghatanegala Okkuta (Bangalore District Federation of Street Vendor Unions), which consists of over 30 street vendor unions in Bangalore, vendors unanimously agreed that they face prohibitive difficulties in going cashless. While one vendor said that she isn’t comfortable using a smart phone – beyond making phone calls, another said that they do not have internet on their phones as 3G charges are expensive.

One of the vendors said, “If Rahul Gandhi’s account got hacked, what is the guarantee that our accounts won’t get hacked? We get numerous fraudulent phone calls every day asking for our debit card passwords and bank account details. We have been duped several times. There won’t be an end to how we will be cheated if we go cashless. Specially because we are not proficient with using these apps.”

While some of the vendors expressed that what they needed was loose change to give their customers, and not a push towards going cashless, another said that demonetisation is positive, since arrogant customers are now being nice to the vendors and taking loans from them.

So, they not only recognise demonetisation as a practical difficulty for their trade, they are inclined to a generosity towards their rude customers as well.

It is not that vendors have not begun using digital wallets already. There are some pani-puri and tea vendors who already have stickers on their thelas saying they accept digital payments.

But if you ask them how their user experience has been, they smile saying, “It makes no sense to collect Rs 5 for a cup of tea on my e-wallet. If the neighbouring construction worker comes to me for chai and cigarette, will he be able to pay me through his smartphone?”

It is difficult for many vendors to shift to any form of digital payment – whether e-wallets, cards, IMPS, etc. The two most dominant payment methods (e-wallets and cards) require a relatively large capital expense, such as a smartphone or a card reader, which are often out of the reach of street vendors’ financial ability. These modes also incur ongoing costs and infrastructure that aren’t always easily available – including electricity connections, mobile data connections and so on.

E-wallets themselves are intentionally quite difficult to use, especially for those who do not have much experience operating a smartphone, and who might not be highly literate in any written language.

Many apps keep changing their layout regularly, and skills which may have been learned will become instantly irrelevant. It is hard to speak to a physical human being with regards to problems in using the apps – many of these so-called "hotlines" are merely automated teller machine phone calls that redirect you to a website.

All interactions with the application are designed to be digital, therefore rendering the system of digital wallets an exclusive ecosystem in itself.

Secondly, many vendors who use these apps have said that they find it relatively easier to take and receive money within the app, but much more difficult to transfer money from their e-wallets into the bank where they can actually access it – because of course, most vendors aren’t able to make payments to their suppliers, buy their own food and pay their children’s school fees through e-wallets or cards!

Even if vendors manage to transfer their money from these apps into the bank, in order to access their own money as cash, they still need to stand in queues outside the bank.

The real concern is that a cashless economy cannot work unless all essential purchases across the strata of society are accessible and can be performed via cashless transactions.

More importantly, there are many reasons to see this drive to go cashless as a step backwards for the majority of Indians, including street vendors.

During this period of manufactured crisis, these apps are aggressively promoting discounts, cashbacks, zero transaction fees and so on. However, after the crisis fades, and if e-wallets become more normalised for everyday transactions, it is certain that transaction fees will start to return, probably to the one-four per cent rates before demonetisation (transaction fees, bank transfer fees, etc.).

And, in countries where cashless transactions have become much more normal, such as Kenya, people are seeing huge fees, even over 40 per cent for small transactions.

Compared to the other forms of payments, the mobile-phone-only method given by the Immediate Payment Service (IMPS) is simpler – using infrastructure many people already have. However, even this charges a flat fee of Rs 1.50, which for a Rs 30 transaction (such as a common meal at a street vendor), comes out to be as much as five per cent.

Moreover, the transaction time is much longer, than if you were transacting with cash.

This affects the business of street vendors, as they have high volume and low value transaction. Cash is fast, but checking for notifications and SMS updates for every transaction in a market like KR Market affects the way street vendors function.

Many vendors are scared to get involved in the cashless economy, as they are not very well versed in these phenomena, and feel they are highly susceptible to various scams. There is always the risk that big firms will mine the data obtained through cashless transactions (even of street vendors) to reach out in a more optimal manner to customers, while street vendors who generate such data for the firms will not have access to it. Therefore, it creates information asymmetry.

This is evident in the way digital wallets have been changing their "terms and conditions", which are unreadable for many street vendors who are not proficient in English. There are no written contracts to fall back upon, either.

This push to go cashless is yet another civilising mission – a way the rich can make the poor feel responsible for their own oppression, and dupe the middle classes in thinking that the salvation of the country comes through individual behaviour and not collective action.

Also read: Why my mother's pyre had to be built on loaned cash

Watch: