VAR ANALYSIS
Narendra Modi ' s demonetization leads to surge in digital payment
The announcement of demonetization of Rs. 500 and Rs. 1,000 by Prime Minister Narendra Modi has led to a surge in digital payments, thereby helping India move towards Digital India
In a historical move that will add strength to the fight against corruption, black money, money laundering, terrorism and financing of terrorists as well as counterfeit notes, Prime Minister Narendra Modi recently announced that the five hundred and one thousand rupee notes will no longer be a legal tender from midnight, 8th November, 2016.
Shri Narendra Modi said that this decision will fully protect the interests of honest and hard-working citizens of India and that those five hundred and one thousand rupee notes hoarded by antinational and antisocial elements will become a worthless piece of paper.
India is now a bright spot in the global economy and is the preferred destination for investment. The demonetization exercise will give a big boost to the banking sector which will give fillip to“ Make in India”,“ Startup India” and“ Standup India” movement, thus helping India to leapfrog.
The industry has come in full support of demonetization of Rs. 500 and Rs. 1,000. We are also witnessing a huge surge in digital payments across all companies and all verticals. Some e-commerce companies have stopped COD( Cash on Delivery) or are reviewing COD and moving towards digital transaction as the country is undergoing a major transformation for the next 50 days.
Speaking about government ' s decision, Rishi Gupta, MD & CEO, FINO PayTech, said, " We believe this development will definitely encourage the large segment who is unbanked and underbanked to join the formal banking ecosystem. As a payments bank, we see this is an extremely positive sign to reach out to these customers for deposit mobilization and investments in a regulated, transparent and safe environment.”
Commenting on demonetization, Sanjay Sethi, Co-Founder & CEO, Shopclues, said, " This is a masterstroke by the BJP government and a very bold move, indeed. Even though this is not the first time such a move has been made by a sitting government, what is significant this time is that it is built on the JAM trinity – Jandhan, Aadhaar and Mobile, making it hard for the country to regress."
Speaking on demonitization of Rs. 500 and Rs. 1,000, Vikas Jain, Co-Founder, Micromax, said, " When a country of a billion people changes, it will be a biggest historical change. In the next 50 days, we are going to witness a significant change in the payment habits of the consumers and as a leading handset player we are proud to be a frontrunner in facilitating this change."
“ Anticipating the change from offline to online payments, our payment facility tied to an escrow account has ensured that the transactions via Quikr are safe, secure and cashless. The government’ s current decision will encourage reliance on online payments in C2C transactions and we are already equipped to handle the change and also enable more consumers to transact seamlessly online,” Anurag Saran, CPO, Quikr.
Amit Jain, President, Uber India, said, " It is a bold move from a cash economy to a digital-first one. We anticipate it will have long-term benefits for the economy, ushering in transparency and a faster adoption of digital payments, something that the Prime Minister Narendra Modi has called for."
" Usage of digital currency and online payment systems driven by UPI, wallets and cards will be on the rise as customers will increasingly opt for e-commerce platforms. It will further position improve India’ s stature as a corruption-free, transparent nation globally, enabling higher capital flow," said Manish Sharma, President, CEAMA.
" Within a 50-day period, over a billion Indians will change their payments behaviour – we will move from cash-only to a cashfree economy. This is a strong step taken by the Modi government and will benefit the growth of digital payments and digital banking in India. We are excited to be a part of this historic moment," said Bipin Preet Singh, CEO, MobiKwik.
" Indian users do a trillion US dollars worth of payments annually, of which more than 90 per cent are in cash. We, at MobiKwik, were trending to process $ 1 billion of payments in
2017. With this policy change, we expect a 10x impact and we expect to easily hit $ 10 billion in payments volume by 2017," added Singh.
“ We welcome the government’ s bold and courageous move to weed out black money, which will have significant long-term benefits for the economy. With this, the quantum of India’ s economy moving through the digital pipe will witness massive growth. Both Snapdeal and FreeCharge are committed to supporting all such initiatives,” says Kunal Bahl, Co-Founder & CEO, Snapdeal.
Paladion Networks CFO Padmanabha Krishnamurthy said, " On the brighter side, it encourages people to transact more on electronic mode payments like NEFT / RTGS / Internet banking, mobile wallets, IMPS, credit / debit cards, etc. The Government and RBI should encourage electronic payment transactions by making it free of cost for the people by eliminating the transaction fees that bank charges for the electronic mode transactions."
On the cybersecurity front, it emphasizes banks to have a more secure banking platform for its customers to do electronic transactions and increase customers’ confidence level on it, added Krishnamurthy.
The demonetization exercise has given a big boost to the digital payment industry and the payment industry needs to be extra careful with respect to making secure transactions so that users do not face problems and they continue with digital transactions helping the economy to grow stronger than ever before. •
46 November 2016 www. varindia. com