Despite the widespread adoption of digital payment methods in India, cash remains the king, and that’s troubling Apple!
Indians’ love affair with cash shows no signs of abating, even for big-ticket purchases such as iPhones and cars. When Apple opened its flagship retail stores in Mumbai and Delhi last year, little did the company know that the cash inflow would be difficult to manage. To address this challenge, Apple recently installed currency-counting machines in its stores to efficiently handle the large influx of cash paid by Indian customers.
Unlike its stores worldwide, Apple’s retail outlets in India operate under a unique system. With a direct line to its US retail team, sales figures seamlessly integrate into the company’s global books.
Surprisingly, cash payments make up a notable 7%-9% of total sales in Apple’s Indian stores, with Delhi outshining Mumbai in cash transactions. This is in sharp contrast with the US and Europe, where cash payments are a rarity. In these regions, cash transactions typically represent less than 1% of total sales, and in some cases, they are entirely non-existence.
Although 7%-9% of cash payments may seem relatively small, it holds considerable weight for Apple, particularly with its most expensive products like the iPhone 15 Pro Max priced at Rs 159,900. For instance, if an Indian customer purchases this model and opts to pay 8% of the total amount in cash, it amounts to Rs 12,792. Considering this, one can’t help but wonder how many customers in a given month opt for cash payments across Apple’s diverse product range, including iPhones, Macs, iPads, and accessories.
The trend of buying Apple products with cash has been a hot topic on social media platforms like Quora. Indians frequently inquire about the possibility of paying for Apple products in cash, along with the limitations and procedures involved.
It’s worth noting that Apple holds a significant 19% share of India’s smartphone market value as of Q1 2024, positioning itself as the second-highest contender after Samsung.
Government Efforts to Reduce Cash Circulation in India
The Indian government has implemented several measures to promote digital payments, including a cash transaction limit of Rs 2 lakh per person per daily transaction since 2017. Despite these efforts to curb black money and encourage digital transactions through UPI, cash circulation in India has surged dramatically.
In March 2017, cash in circulation was Rs 13.35 lakh crore, which ballooned to Rs 35.15 lakh crore by March 2024. Notably, this significant increase in currency circulation occurred despite the central bank’s decision to withdraw Rs 2000 denomination banknotes from circulation starting May 2023. As a result, the central bank managed to retrieve 97.8% of the Rs 3.56 lakh crore worth of notes back into the banking system.
The popularity of cash strives even amidst massive growth in digital payments facilitated by the UPI. In April 2024 alone, UPI transactions in India reached 1,330 crore in volume and Rs 19.64 lakh crore in value. Over the period between March 2017 and 2024, the value of UPI transactions in India skyrocketed from Rs 2,425 crore to 19.78 lakh crore, as per the latest data from the National Payments Corporation of India (NPCI).
Cash Payments in Car Sales
Apple is not alone in witnessing Indian consumers’ preference for cash transactions. The allure of cash also extends to car sales, reflecting a broader cultural preference for liquidity and financial autonomy.
The Federation of Automobile Dealers Associations (FADA) estimates that 15%-20% of car purchases in India are self-financed, with a significant portion of that amount paid in cash. This trend holds true even in the luxury car segment, where one-fifth of sales occur via direct cash payments. Typically, buyers offer an upfront payment of Rs 2 lakh, with the remaining balance being settled through various methods such as cheques, bank drafts, net banking, debit cards, or other electronic means.
Cash payments are particularly prevalent in metro cities like Mumbai and Bengaluru. Mercedes-Benz India, a prominent player in the luxury car segment, attests to this trend, revealing that nearly a quarter of their sales in these cities are done entirely in cash.
“Nearly 20 percent of our customers choose to make their purchase entirely in cash,” reveals Santosh Iyer, Managing Director of Mercedes-Benz India.
The enduring popularity of cash in India can be attributed to various factors.
Manish Raj Singhania, President of FADA, highlighted that a significant number of customers prefer using their savings rather than opting for financing options. This is mainly because some of these customers lack the necessary documents, like income tax returns, to avail of a bank loan or are not deemed credit-worthy. As a result, these customers, spanning both rural and urban India, opt to make payments of up to Rs 2 lakh in cash.
India’s deep-rooted cash culture presents unique challenges as well as opportunities for businesses. Despite governmental efforts to promote digital payments, the popularity of cash remains robust. This presents a unique challenge for tech companies like Apple, which are accustomed to a more digital-driven sales environment. As India continues to evolve, it will be interesting to see how the balance between cash and digital payments shapes up in the future.
Do you prefer making cash payments when purchasing premium products like Apple iPhones or other high-end gadgets? Let us know in the comment section below!
