Is it safe to say that cash will no longer be king in India? When India was queuing at ATMs to withdraw cash in the wake of Prime Minister Narendra Modi’s dramatic announcement of demonetizing 500 and 1000 Rs currencies, I being the resilient marketer that I am started looking for some quick-thinking brands that would definitely sniff out a prospect in the mess by seeking opportunity in adversity. And, there I was. 2 words from Indian e-comm giant Paytm caught my sight – Paytm Karo! I said to myself, Well Done!
As the Donald Trump win has kept the world on its edge, if you’ve been living under a rock, I’ll tell you what the entire demonetization event is and why it’s being termed the ‘surgical strike’ on the billions of black money moving from hand to hand in and out of India.
On Nov 8, Prime Minister Narendra Modi, in a televised address abolished Rs 500 and Rs 1000 notes to tackle corruption, curb black money and terrorism. The government will soon re-introduce Rs 500 notes and brand new Rs 2000 denomination notes. Account holders can deposit Rs 500 and Rs1000 notes in banks and post offices over the next 50 days with proof of identification. Did you know that currently India’s black money economy is about a whopping 20% of its GDP?
Here’s some interesting trivia. Did you know that this is not the 1st time that India is pulling bank notes from circulation? The 1st instance was in 1946 when Rs 1000, Rs 5000 and Rs 10000 (the largest currency notes to have ever been printed by RBI) notes were taken out of circulation and the 2nd was in early 70s when demonetization was suggested to unearth and counter the spread of black money. Well, if third time’s a charm, let’s see if this ban can wipe off corruption from India.
Alright, now getting to my point. All said and done while this is by far the biggest and the most appreciated (by some) move made by the Modi govt, in a stroke of some brilliant timely marketing, the scores of digital payment and wallet companies across India stood to be the biggest beneficiary of this crackdown on corruption. From Paytm to Zomato, from FreeCharge to MobiKwik and from Ola to Savn Music, they thought rather ingeniously and promoted their wares wonderfully. Big Bazaar even kept their stores open until 11:50 pm so that people could stock up on their daily needs. Brilliant marketing move, isn’t it? I say, this is the golden age to be a techpreneur more so if you are a fintech one.
In India where payments still happen in cash and about 1/4th of the $2 trillion economy is unaccounted for, this push made by Narendra Modi electronic transactions and a cashless economy will rapidly improve transparency. Bloomberg reports *transaction volumes at companies could increase about 120% each year over the next few years signaling that physical cash is no longer welcome. Payment app, Freecharge saw an unprecedented 12-fold jump overnight in its average wallet balance.
Digital wallet players are praising this verdict as a massive opportunity for growth awaits in terms of digital payments and digital banking across India. Cash withdrawal and deposit limits mean that the millions who have never employed a digital way of payments will now be bound to scramble to decipher how mobile wallets or for that matter even a debit card works. After months of their efforts to try and make the country go cashless via digital, the quantum of India’s economy that was once gradually moving through digital pipes will now witness sudden massive growth.
Additionally, as India’s relation with cash changed at once there is also the safety factor in digital wallets that’s always a question hanging by the neck. I’ll tell you, there will surely be a huge upsurge in digital payments and you’ll not have to think of the safety of your cash because with every digital transaction, you will have a digital trail and footprint that you’ll be able to track. In a while, the jewellery sector might eventually come under the gamut of digital transactions thus leading to huge big-ticket digital transactions, a huge boost for the fintech companies.