While the youngsters were busy celebrating #NoShaveNovember, Indian Government played the spoilsport by making it a #NoCashNovember. It was still midnight when Indian government scrapped Rs500 and Rs1,000 banknotes and introduce new notes. People who were carrying notes – suddenly felt at a loss of it. Some see it as a manipulative political move. Some call it all a part of conspiracy. Some have applauded this move as the most important step towards a corruption-less nation. Some even call it a work of Illuminati.
However, people didn’t realise that this “cash-lessness” of notes is an indirect gain of “cashless industry”. Earlier, people had to wait for cash on delivery systems. Infact, this system was already in a declining stage. And this move, only strengthened cashless transactions. This move, saw a spike in all cities, big and small, pan-India, consisting of small merchants. The most positive signs were seen in Indian e-commerce industry.
With the ever increasing reach of smartphones and ease of access to the internet. This move only encouraged the adaptability of electronic transactions. Which was slowly growing in India. People are now comfortable transacting using mobile wallets and swipe cards at point-of-sale (POS) terminals and not just using them to withdraw money from ATMs. The regulatory policies towards digital payments have been supportive as well. Paving the way for new opportunities—cases in point are the Unified Payment Interface (UPI), the Goods and Services Tax (GST).
The latest study by the Internet and Mobile Association of India (IAMAI) has, found that at a CAGR growth rate of about 30 percent between December 2011 and December 2015, Indian digital commerce stands at Rs 1,25,732 crore. Online shopping is valued close to Rs 76,396 crore. Also, the 76 percent shoppers who were still preferring to pay by cash-on-delivery (CoD) – this move gave the e-tailers a weapon to fight off.
Several areas in which India is trying to improve its digital economy, started technologically advanced digital payment systems. Increased merchant acceptance, improvements in UPI – allows monetary transfers between any two bank accounts via a smartphone, as well as a reduction in cash-based transactions. These changes indicate towards a more cashless driven society. Even the vegetable vendors on the streets have opened up ewallet accounts and have a machine outside their shops where customers can scan the barcode and make the payment. A lot more retail outlets are accepting ewallets. Which is almost considered revolutionary, and survival of the fittest.
That being said, electronic payments systems has also sparked some very innovative solutions. The farmers’ markets of Telangana began experimenting with their own electronic payment system. Where customers with Aadhar-linked bank accounts could buy vegetables using tokens. Purchased via debit cards at specialized kiosks. This has given a major push to non-cash transactions such as credit/debit cards, mobile wallets, Bitcoins and UPI.
Ecommerce giants, mobile wallets and technology firms that provides alternate payment methods (digital payments) has seen a heavy surge in their revenue. Because of demonetization people sought to digital payments to avoid waiting in long queue outside banks or empty ATMs. In addition to people who are getting into digital wallets, the digital payment firms gave good deals and tempting offers in order to drag people’s attention.
Indian ecommerce industry has been in for a serious hit. So, what actually explains the motto behind this move? A cashless nation? A digitalised nation? There were ewallet companies which hugely cashed in with the cash ban. A national cashless payment system set up by leading banks totalled up a mere 250,000 transactions in the first week of December. It saw 7 fold rise in its online traffic.
The sector which was collapsing as investors started moving out, is flourishing now as well. But will this sustain for a longer time? Will it have the desired effects on the country? Imagine an India where all merchants can digitally sign up for a tax number, report sales and submit returns real time. This requires digitization of every business. Though the bigger picture is not clear, demonetisation is a ground-breaking move for our country and this will lead to one of the major ripple effects in its economy.