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Notes withdrawal: Move towards digital cash
Uma Kannan, Bengaluru: Nov 10, 2016, DHNS 23:26 IST
FinTech companies are upbeat after the government’s announcement of demonetisation of Rs 500 and Rs 1,000 notes, as they feel this move will definitely improve the digital payments system in the country.
Eventhough close to 90% of transactions are happening in cash, India is witnessing a growth in the digital payments with the advent of wallet and ecommerce companies.
Chairman of Payment Council of India and MD of digital payments company ItzCash, Naveen Surya, said that cash is like a disease and it’s our real enemy. “ItzCash has already witnessed more than 30-40% growth in volumes traded since Tuesday night.
We expect this momentum to continue even while the government introduces new notes in denomination of Rs 500 and Rs 2,000,” he said. Surya is optimistic that the move towards digital payments within three to five years will reach almost 50% from the current meagre 10%.
According to a Google and Boston Consulting Group (BCG) report titled ‘Digital Payments 2020’, more than 50% of India’s Internet users will use digital payments by 2020. “By 2020, the size of the digital payments industry in India will be $500 billion, and it will contribute 15% to India’s GDP,” states the report.
Online payments platform Razorpay’s CEO and co-founder Harshil Mathur pointed out that in the travel sector almost 100% transactions are through digital. “Digital payments differ from one sector to another. If you take the ecommerce sector, 50% of orders are CoD (cash-on-delivery) mode of payment,” he said.
Mathur pointed out that except India, no other country has this CoD. “With the demonetisation, in another three to four years, the percentage of CoD will come down drastically. Maybe a few orders might happen through this mode,” he said, adding that many people, who have not tried digital payments so far, are now trying because the banks and ATMs are shut.
“Post the introduction of new notes too, there will be less availability of cash for customers prompting a shift to digital channels for making payments. From this perspective, entities that are involved in electronic payments such as banks, wallets and card issuers, will benefit. Going forward, this will only get strengthened,” says FINO PayTech CEO and MD Rishi Gupta.
A payments technology company, FINO PayTech has received the RBI’s in-principle approval to start a payments bank. DH News Service
American Express South Asia President Sanjay Rishi said that this will certainly help accelerate electronic payment usage and acceptance, and in the process, eliminate the severe inefficiencies related to printing, storing and moving cash, while driving greater transparency in transactions.
*Paytm is registering massive growth across India. The Paytm platform saw an overwhelming 435% increase in overall traffic
*Independent mobile wallet MobiKwik has witnessed an over 40% increase in app downloads within less than 18 hours of the announcement of Rs 500/Rs 1000 notes pullout
*MFIN CEO Ratna Vishwanathan said as far as microfinance is concerned, it is predominantly cash driven and there are challenges with reference to disbursal
*Ola Money has reported over 1500% increase in recharges across the 102 cities of its operation since 8:30 pm on November 8 to 12 noon on November 9