More than half of the train tickets in India are purchased with cash, but digital payments can gather steam if booking agents are incentivised, notes a RailYatri survey.
The current ticketing ecosystem rewards cash and penalises online transactions, according to the findings based on a countrywide survey of consumers and ticketing agents, conducted by RailYatri, a web-based firm that provides rail and bus-based solutions.
Agents prefer cash as there is an upper limit to the electronic payment gateway charges they can charge for tickets up to ₹2,000, which is lower than the average bank charges. This makes it costlier for agents to accept e-payments.
“A significant consumer section depends on managed services, especially when the complexity of their need is high,” says Manish Rathi Co-Founder & CEO, RailYatri. “And given the supply-demand mismatch and other uncertainties, ticket booking falls in this bucket. This has led to the popularity of train ticket booking through mom-and-pop travel agents.”
A recent survey by RailYatri showed that while bigger agents have mechanisms for accepting digital payments, their bookings are done nearly entirely in cash.
While consumers have shown an inclination towards digital payment, agents are holding back. Much of this is due to outdated ticketing rules and the penalty imposed on them, says RailYatri.
The survey found that the “unrealistic” rule imposing a 0.7 per cent cap on payment gateway charges (for train tickets under ₹2,000) is out of tune with the bank charges that agents have to pay.
According to RailYatri, the typical payment gateway charges vary between 1.5 per cent and 2 per cent, depending on the provider. Agents are unwilling to pay the difference from their own pocket. If an agent charges in excess of 0.7 per cent, even if the money is finally kept by the bank, he faces steep fines and penalties. That explains the preference for cash.
Rising costs Second, cash transactions leave no trail. These agents have seen train ticket costs increase by more than 80 per cent in the past five years; so too has the cost of running their business. However, their commission on train tickets has been capped at ₹20/40 for many years.
Agents therefore continue to accept cash payments, as it allows them to charge without a trail of the actual amount paid. Consumers, unfortunately, are the biggest losers in this.