Importance of Digital Payments in the RE Industry to Build Transparency

The COVID-19 pandemic impacted the national economies of several countries worldwide. In India, several sectors were adversely impacted as well, but an increasing reliance on technology and innovation made it possible for businesses to get back on their feet. Even street vendors, neighbourhood grocery shops, and pharmacists moved to digital payment systems and home delivery models. The National Payments Corporation of India had already launched BHIM, a mobile payment app based on UPI (Unified Payment Interface), in an endeavour to make transactions in the country cashless, and many large and mid-sized corporations jumped on the digital payments bandwagon in an attempt to keep their growing their businesses.

The digital revolution in real estate

Despite this quick transition made by others, real estate remained the one sector that took a massive hit at this time, primarily due to a lack of technological foundation. However, the real estate crisis triggered by the pandemic led to the realisation that proptech and digital payment systems in real estate could be the two main pillars that would help the sector forge ahead. With this awakening, most major developers across the country have started looking towards cashless transactions and online payment tools to make their processes, sales, and operations more efficient, transparent, and futuristic.

Government initiatives

In 2020, the Government of India launched two digital platforms to accelerate digital adoption in the real estate sector. The CREDAI Awaas App and the NAREDCO online portal HousingforAll.com were launched by the Minister for Housing and Urban Affairs. The CREDAI (Confederation of Real Estate Developers' Associations of India) Awaas App is India's largest digital real estate platform committed to improving homebuyer trust and transparency. It lists RERA-registered projects from over 13,000 developers spread across 21 states and 217 cities. National Real Estate Development Council's portal helps home buyers access the details of projects across the country and also helps with online booking at the lowest prices.

The Blox revolution

Apart from government initiatives, the sector is now turning towards revolutionary digital platforms like Blox that offer an end-to-end home buying experience with the help of advanced technological tools. The key to making the best of this digital homebuying journey is complete transparency, connecting directly with developers and builders, availing of the protections of RERA, and making digital payments in real estate possible. Blox is also a zero-fee platform which facilitates virtual home tours, shortlisting and comparison of various projects based on user criteria, and personalised support to the home buyer.

RERA 70-30 rule

Digitisation of real estate transactions ties in neatly into the RERA 70-30 directive that requires developers to maintain nearly 70% of the money paid by home buyers into a separate account, to be used only for construction purposes. Digital payments amplify the legal and financial protections and failsafe offered by the legislation to potential investors.

Benefits to developers

It must be acknowledged that the adoption of digital tools, technologies, and applications by the real estate sector has been slow. The players who have gone ahead and embraced technology, however, are amazed by the benefits to their organisations. From vendor selection to materials management, from budgeting to inventory appraisal, from project planning to design, and from accounting to taxation – nearly every aspect of the business can be optimised by proptech tools. Digital real estate transactions have also helped developers make the most of the GST (Goods and Services Tax) regime and automate GST refund applications based on the company's operations.

The black money menace

Nearly half a decade has elapsed since the launch of the government's offensive on black money. Despite this, untaxed wealth remains a menace that haunts the country's real estate sector. According to a 2022 survey, a vast majority of home buyers continue to be plagued by the cash transactions involved in real estate dealings. This has prompted real estate experts, key players, and developers to call for self-regulation in the industry and a concentrated effort to eradicate the parallel economy that exists due to the prevalence of black money. Industry-wide adoption of digital payment systems, e-wallets, and cashless transactions can go a long way in this endeavour.

In conclusion

The real estate sector of India is yet to realise the full potential of technological tools, process integration, and digitalisation of transactions. Ironically, the sector is best poised to reap the benefits of these tools and innovations, given the high-value transactions that are conducted in planning, constructing, buying, and selling property. Another major benefit that can be availed by homebuyers across the real estate development food chain is the ability to establish legal ownership claims and titles by following the trail of financial activity. This is one major concern that plagues most real estate investors and home buyers in the country.