What is the future of digital payments in India amid continuous threat on data theft issues?*

At various times over the years, people have asked similar questions about many things.

For example:

  • What is the future of computerization amid continuous threat of loss of jobs?
  • What is the future of Concorde amid noise pollution?

Loss of jobs did – and do – happen with computerization, yet computers have flourished.

As far back as 1976, Concorde cut down the flying time from London / LHR to New York City / JFK from 5.5 hours to 3.5 hours.

No other aircraft, even in 2020, has achieved Concorde’s speed. Despite all of that, Concorde succumbed to concerns over noise pollution caused by its sonic boom and had to shut down.

Both Computers and Concorde are what are commonly termed innovation / progress. Both have pros and cons. One flourished despite the cons. The other did not.

I attribute the disconnect between Computers on the one hand and Concorde on the other largely to Marketing.

As I once highlighted on LinkedIn:

Many products solve one old problem but introduce three new problems e.g. Kubernetes re. Vendor Lock-in (Source: Gartner). But they’re still successful. How?

The trick is to turn short attention span to your advantage. Use Marketable Items to amp up the solution to the one problem that your product solves. Your customers will miss the three problems that your product introduces because they have a short attention span.

This strategy has worked in IT for decades. Back in the day, Microsoft pitched Windows as a way to avoid lock-in to PC hardware brand. It took a while for customers to realize that they were now locked in to Microsoft. Kubernetes is only a recent example. Vendor Lock-in never really goes away, just changes form. No, Kubernetes doesn’t make applications portable, say analysts. Good luck avoiding lock-in, too

I see similar dynamics at play in the case of Digital Payments.

I have a vested interest in digital payments but I’ll set that aside and not make the oft-made claim that it’s progress and wax eloquent about how you can’t stop progress blah blah blah.

When I last checked, digital payments had a penetration rate of around 20% in India. Prima facie, that means it has huge headroom to grow in India. OTOH there are serious concerns over data theft, fraud, and so on.

Whether Digital Payments will overcome these concerns and go on to achieve its full potential really depends on Marketing, as in the case with the success of Computers and failure of Concorde.

*: This is the original question I answered. I’m repeating it to help me make sense of my answer in case it’s moved to / merged with some other question that I didn’t answer.