There will be a surge in cashless transactions as smartphone-addicted Indians are expected to embrace digital and mobile money like never before, after Prime Minister Narendra Modi announced that notes of Rs 500 and Rs 1,000 will become “illegal” beginning Wednesday.
The move, according to industry stakeholders and experts, will be one of the key drivers in the growth of mobile wallets, online payments, and e-commerce business at large (apart from use of the credit and debit cards, both online and offline).
Snapdeal’s co-founder and CEO, Kunal Bahl, too, said the move is a boon for his business. “Cash-on-delivery (COD) will go down overnight, and so will the returns, improving the economics of the e-commerce industry.”
“This is unprecedented and the biggest move in the history of digital commerce… and it will revolutionise the digital economy… India will leapfrog a few generations in the space of digital commerce,” said Vijay Shekhar Sharma, founder and CEO of Paytm, the country’s largest mobile payments company.
Others were more dramatic.
“This is the biggest move the currency economy has had since independence, which will change the economy forever,” said Bipin Preet Singh, founder and CEO of mobile wallet firm, MobiKwik.
Biggest surgical strike on cash in living memory. Likely anywhere in history ! Jai ho @narendramodi— Bipin Preet Singh (@BipinSingh) 8 November 2016
Transactions through digital platforms allow easier tracking of flow of money in commerce, resulting is better audit. E-commerce firms and mobile wallets can also share the commerce data with the government, which will help in curbing black money.
Mobile wallets and ecommerce transactions reduce the hassle of handling cash, and there are no caps on withdrawal and usage. Paytm’s Sharma expects number of transactions to go up five times in the next six months, and value to jump by three times.
COD has been a unique thing for India – its 60% of all online transactions. Bahl expects it to go down by half in the coming months – as a lot of people who were buying online but using cash will shift to cashless means.
A lot of large items, which people otherwise use cash to purchase from offline store, will also shift to online purchases. “People will now look to the benefits from e-commerce as it allows more customization to purchases such as easy installments, which the offline world doesn’t offer in an easy manner,” said Ambareesh Murthy, founder and CEO of Pepperfry, online furniture seller.
For the digital world, cash has always been the biggest demon. “E-commerce companies will have to build solutions and products to promote digital payments… The real problem is for people who don’t have credit or debit card, who will turn to wallets and prepaid payments,” said Naveen Surya, chairman, payments council of India, and managing director of Itzcash.
Full fledge war on cash waged by government superb news for digital money!— Navin (@SuryaNavin) 8 November 2016