The government’s decision to ban currency notes of Rs. 500 and Rs. 1000 as an official mode of payment in a demonetization drive took the entire nation off guard. These currency units are stripped of their status as legal tender.
India is a cash-driven economy and Indians prefer to make their payments in cash. According to a report released by the Reserve Bank of India earlier this year, India’s average number of credit card transactions per inhabitant is 6.7 which is among the lowest in the world. Many mom-and-pop shops refuse to accept digital or electronic payments and don’t have PoS terminals, while there are chain stores that levy a surcharge on credit card payments. Also, India has a dormancy rate of 43%, which is about 195 million adults, that means the bank accounts of these individuals have reported making no deposit or withdrawal and no electronic wage deposits, payments or purchases in the past 12 months and therefore their account is considered a dormant account.
One of the biggest and boldest moves taken in a bid towards economic reforms in the country will gradually lead to digitilization, a cashless economy and increased transparency in all transactions. Having said that, this step towards a cashless economy has led to some collateral damage. One of the sectors that is majorly hit by the demonetization drive is the tourism and hospitality industry.
- Tourists have cut short their trips as they are facing problems with long queues at the banks and ATMs not coughing up enough money to cover their expenses.
- Many travellers have cancelled their trips at the last minute due to non availability of cash in the market.
- November to February, which is the peak wedding season and brings good business to destination wedding venues, has taken a hit too. The hotel industry is finding it difficult to make the payment of daily wage help and labourers belonging to the unorganized sector due to the cash crunch.
However, at the same time, the hotel industry has welcomed the cashless move by the government and is viewing it as a temporary inconvenience. Hotels are urging their customers to take a pick from various cashless options available to make bookings such as cheques, credit cards, wire transfers and loyalty points. Another option that the hotels can offer their customers to get away from making offline cash payment is payment through ewallets. After the recent demonetization drive, Paytm, India’s largest mobile wallet company, has seen a 435% hike in overall traffic for offline transactions on the platform. The number of Saved Cards grew by 30%, while Mobikwik registered a 40% increase in app downloads within the first 24 hours of the news.
There are also other cashless systems that hotel can implement to handle cashless transactions now as well as for long term profitability. DJUBO’s cloud based 360 hotel sales platform can help you to implement these systems in the following ways:
Booking Engine: The booking engine comes with an intuitive user interface aimed to deliver a great user experience and commission-free bookings. This booking engine integrated with your Hotel CRS and Channel Manager, simplifies management, by ensuring that your booking engine inventory stays updated and any reservations done through the booking engine gets synced across to your other sales channels, without any manual intervention.
Quick Pay & E-collect: Using the ‘Quick Pay’ branded custom payment portal on their website, the guests can make payments of any amount online. It reduces last minute cancellations and the hotels thus receive instant payments without the hassle of waiting for cheques to clear and handing out their bank details again and again. Also, it can prove to be a saviour during those times when credit card machines refuse to work and the guests are upset and irritated at the inconvenience.
The Ecollect feature can be used to send pre-defined payment link via email and SMS to your guests to make payments for room charges, room service or other add on services.
The demonetization drive is a positive step towards curbing black money in the economy and promoting a cashless economy. While some may choose to oppose it or hail it, demonetization is a fact and it is irreversible. Hence, it’s in the best interest of hotels to adopt cashless facilities to avoid losing business now and in the future.
Do you offer cashless facilities to your clients in your hotel? If not, now is the time…!!!