50% train tickets are still purchased in cash

50% train tickets are still purchased in cash

In a finding that possibly will surprise many – more than half of the train tickets in India are purchased in cash. And this is not because the train travellers necessarily prefer it that way, but the sale of reserved train tickets through authorized agents (contributing an estimated half of reserved ticket sales) continues to be in cash. The primary cause for this is the dis-incentive eco-system which rewards cash while penalizing online transactions. This finding is based on a countrywide survey of consumers and ticketing agents. The finding also stresses that correction is needed immediately to enhance digital payments – so emphatically stressed by the Hon’ble Prime Minister of India.

The neighbourhood ticketing agent still continues to be the preferred choice for Indians looking to buy their train tickets. An estimated 65,000 of these small businesses are spread across the nook & corners of the country, representing the true grit of Indian entrepreneurs while battling all kinds of odds to keep themselves afloat. Their differentiators being around door-step service, local knowledge & customer relationships. Train ticket purchase involves a number of decisions, and travellers prefer to go through their trusted agents to do the job.

“A significant consumer section of India depends on managed services, especially when the complexity of their need is high. And because of the supply-demand mismatch & other uncertainties around train travel, ticket booking falls in this bucket. This has in turn led to the popularity of train ticket booking through these mom-and-pop travel agents.” says Manish Rathi Co-Founder & CEO, RailYatri.

Based on a recent survey done by RailYatri, it was found that while the larger agents have mechanisms of accepting digital payments, their train ticket booking is nearly 100% in cash. While consumers have increasingly shown an inclination towards digital payment, the travel agents still shun from accepting these. Much of it, according to them, is due to the outdated ticketing rules and penalty imposed on them.

The study found that the unrealistic rule of imposing a cap on Payment Gateway (PG) charges at 0.7% (for train tickets prices less than Rs. 2000) is completely out of tune with the average bank charges, which the agents have to pay. According to RailYatri, the typical PG charges varies between 1.5% to 2% depending on the provider, with most providers falling on the higher side. Agents, understandably, are unwilling to pay for the difference over 0.7% to the payment banks from their own pocket. Any instance of charging above 0.7%, even if the money is finally kept by the bank, exposes the agent to steep fines and penalties. Hence their preference for cash.

Secondly, cash transactions leave no trail. These agents have seen the cost of train tickets increasing more than 80% in the last 5 years and so have the cost of running their business. However, their commission on train tickets have been capped to Rs. 20/40 with no increase in the last many years. This has forced several agents to continue with cash payments as it allows them to charge without a trail of actual amount paid. Consumer, unfortunately is the biggest loser in this.

“Nearly a crore train tickets every month are being booked in cash and this doesn’t opine well with the well-intended and ambitious plan of the Government to move the nation towards Digitization and Online Payments – especially when this is in their own backyard. However, the good news is that this can be quickly fixed by revisiting the rules. These agents are an integral part of small businesses ecosystem and the system needs to incentivize them to accept and look for customers who are willing to pay digitally-thus fulfilling the Digital India dream. With the new management at the helm in the ministry, we sincerely hope a concerted effort is made in this direction,” says Manish Rathi Co-Founder & CEO RailYatri.

You might also like

Latest

Thomas Cook India intends to leverage growth potential of North India

Increases consumer access with their flagship store at Connaught Place Thomas Cook (India) Ltd., India’s leading integrated travel and travel related financial services company, strengthened its presence in North India

Latest

SpiceJet hires extra staff, ties up with hotels in its fog readiness plan

Airline alters flight schedule for fog-prone cities, with early departures for night flights and day-time departures for morning flights SpiceJet has altered its schedule, tied up with hotels and hired

Trending

VFS Global to facilitate FAN IDs for the 2018 FIFA World Cup

FAN ID will also entitle its holder visa free entry to the Russian Federation. As Russia looks forward to welcoming football enthusiasts for the FIFA World Cup 2018, VFS Global offers extra convenience to football fans by providing access to more than 165 of