Mobile wallet companies and digital payment platforms are seeing a tremendous surge in traffic and in the number transactions made within 24 hours of the government’s announcement the current `500 and `1,000 notes would not be legal tender. Mobile wallets run by banks, such as ICICI’s Pockets, SBI’s Buddy and HDFC’s PayZapp may also witness a sharp increase in traffic. However, analysts said customers will possibly find it easier to load their stand-alone wallets, which includes the likes of Paytm, PayU and Mobikwik.
“Currently, there is no regulation saying you have to disclose e-wallet accounts to the tax department, something that you are required to do with bank accounts. So at least for relatively smaller sums, loading money onto e-wallet accounts seems to be a viable way to go for a lot of people,” Kalpesh Mehta, Partner, Deloitte told FE.
However, Murali Balaraman, partner, EY pointed out it remained to be seen is if the sudden influx of digital payments will continue even after the new notes are made available to the public. “Only time will tell if this decision is enough to bring about a change in spending behaviour because people are still too used to spending in cash,” Balaraman added.
He said one of the key methods to maintain the surge in digital payments would be to incentivise vendors and small, medium merchants to receive payments electronically instead of in cash.
Sunil Kulkarni, deputy managing director at Oxigen Services, said the average ticket size is also expected to jump by 50%. “However, this is a shot-term spike and this situation is going to stabilise to a new normal which should be at least to be 40-45% of the pre-announcement period,” Kulkarni observed.
Fintech players expect digital payments to grow at rapidly as the move to curb black money will not only bring in more people into the formal financial system, but specifically encouraged them to go digital. Mobikwik said it has seen a near 30% growth in the number of people loading their wallets while Oxigen Wallet said load money transactions rose by up to 40-45% during the first half of Wednesday.
Paytm, the country’s largest mobile wallet by customer base, said it has seen a 1000% growth in money added to wallets and 400% growth in transaction value of offline payments. The number of saved cards also grew by 30%, pointing at customers who repeatedly came back to the platform.”This is the biggest and most ambitious step ever to crack down on black money and fake currency… we have registered a strong surge in volume on our platform,” Paytm CFO Madhur Deora said.
Payment solutions provider ItzCash’s managing director, Naveen Surya told Fe that while his company had been growing at a pace of 40-50% in the past three years, the government’s move to demonetise the notes would propel them to a plus 100% growth going forward. “We have witnessed more than 30-40% growth in the volumes traded since Tuesday. Right now our priority is to educate people, as there are many who don’t know what exactly is going on and are in a state of panic,” Surya added.