50% train tickets still purchased in cash

Posted by: at 9/19/2017 03:13:00 am
50% train tickets still purchased in cash

India,19th Sept; 2017: 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 travelers 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 neighborhood 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 travelers 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 Mr. 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 Much of it, according to them, is due to the outdated ticketing rules and penalty imposed on them.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.

About RailYatri.in:

RailYatri.in is the #1 train travel community in India. Noida-based RailYatri.in was set up in 2011 with a mission to simplify train travel with Manish Rathi (Computer Science, Western Michigan Univ, US), Kapil Raizada (IIT Kanpur, IIM Bangalore) and Sachin Saxena (IIT Kharagpur, Stanford) as its co-founders. RailYatri.in launched its consumer products in early 2014 and has seen a rapid growth since then.


You May Also Like

Share Your Opinion