Apple Faces Cash Payment Challenge in India, Echoing Trends in Car Sales

Apple Faces Cash Payment Challenge in India, Echoing Trends in Car Sales

Apple Faces Cash Payment Challenge in India, Echoing Trends in Car Sales

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Apple encountered an unexpected challenge shortly after opening its first company-owned stores in India last April—many customers preferred to pay in cash. 

This led the tech giant to install currency note counting machines in both its Mumbai and Delhi outlets. Despite the rise of digital payments, 7-9% of Apple’s sales at these stores are made in cash, a stark contrast to the less than 1% in its stores in the US or Europe, according to insiders.

This cash preference is more pronounced in the Delhi store compared to the Mumbai store. These stores directly report to Apple’s retail team in the US, and their sales are included in Apple’s global accounts. The popularity of cash transactions at Apple stores has even sparked numerous queries on Quora from consumers curious about paying in cash.

Apple’s experience is not unique in India, where cash transactions remain significant despite government efforts to promote digital payments and limit cash transactions to ₹2 lakh per person per day since 2017. 

Cash in circulation more than doubled to ₹35.15 lakh crore in March 2023 from ₹13.35 lakh crore in March 2017, despite the surge in digital payments through the Unified Payments Interface (UPI), which grew to ₹19.64 lakh crore in April 2023 from ₹2,425 crore in March 2017, according to the National Payments Corporation of India.

Similarly, cash payments are prevalent in car sales. The Federation of Automobile Dealers Associations (FADA) estimates that 15-20% of cars sold in India are self-funded. For luxury vehicles, a fifth of sales involve direct cash payments, with buyers typically paying ₹2 lakh upfront and the balance through other means such as cheques or electronic transfers. 

Mercedes-Benz India reports an even higher proportion of cash and self-funded purchases, with 25% in Mumbai and Bengaluru and 15% in other markets. “Almost 20% of customers opt for an all-cash purchase,” said Santosh Iyer, managing director of Mercedes-Benz India. A car dealer in Delhi, speaking anonymously, shared his frustration when a buyer wanted to purchase a super luxury car entirely in cash.

Manish Raj Singhania, president of FADA, explained that many customers prefer to pay in cash to avoid financing options and interest payments. 

Some customers also lack the necessary documents to secure a bank loan or are not deemed credit-worthy. This trend is observed not only in rural areas but also in urban markets, where customers often combine cash payments up to ₹2 lakh with cheques and RTGS (real-time gross settlement) transfers.

Despite the government’s push for digital payments, the continued preference for cash in high-value transactions like electronics and automobiles highlights the complex financial behaviors in India.