Mobile wallet brands are benefiting from India’s “demonetisation” as consumers seek out alternative payment options after the government scrapped large denomination banknotes.
A week after the unexpected step – aimed at cracking down on corruption and tax evasion – the country’s digital payment businesses are seeing increased take-up, especially in urban areas, the Financial Times reported.
“We have seen unprecedented growth over the past few days,” said Kiran Vasireddy, senior vice-president at Paytm, adding that 70-80% of customers were in urban areas. Since 8 November, the company claims to have seen 4m people start using Paytm wallets, while traffic to its site has leapt 700% and app downloads are up 300%.
“This is going to change the industry forever,” said Bipin Preet Singh, co-founder of MobiKwik. “The tipping point will be when 50% of the population is cashless, and I now think that could happen in one to two years.”
While there are also options via traditional banking brands – debit and credit cards, internet banking and the immediate payment system (IMPS) – many consumers do not have a bank account; but adopting mobile wallets will bring them into the financial mainstream.
“This is much larger than just a historic moment on the path to going cashless,” said Gaurav Raina, joint secretary at the Mobile Payment Forum of India.
“It also means that a whole section of society can start to build up a credit history and then get loans and insurance products,” he added. “The eventual goal is full financial inclusion.”