As almost 86% of India’s currency circulation turned into worthless paper after November 8, 2016, mobile wallets and fintech companies providing alternative payment avenues saw a big boost.
People turned to digital payments after initial confusion followed by serpentine queues outside banks and empty ATMs. That’s a big deal for a country that paid cash for 78% of all customer payments in 2015, according to research by Boston Consulting Group and Google India.
The biggest gainers were mobile wallet companies that offer ease of transactions through a large network of partners. Customers could pay for grocery, petrol or even at the doctor’s office with their mobile phones instead of cash.
In less than a week since the currency note ban went into effect, Alibaba backed Paytm saw a 7 fold increase in overall traffic and a 10x jump in money added to Paytm accounts. It also saw the number of transactions double to 5 million a day. And that definitely means aggressive business expansion for the company.
“Owing to the overwhelming response from consumers and merchants alike, we have set bolder targets in merchant acquisition, and are aiming to target 5 million merchants by the end of the financial year,” said Paytm Senior Vice President Kiran Vasireddy in a statement.
While app downloads for Paytm increased by 300%, rival Mobikwik also saw its app downloads quadruple and a 20x increase in money added to the wallets MobiKwik Founder & CEO Bipin Preet Singh, told CNBC-TV18 on November 13.
Prepaid cash cards are another option that customers found useful and that meant good news for companies like ItzCash. “ItzCash card is now coming in as a huge rescue instrument for the public at large, so much so that we have witnessed more than 30-40% growth in the volumes traded since yesterday,” said Naveen Surya, MD, ItzCash in a statement a day after the move was put in effect.
Other alternatives include mobile payments systems linked to e-commerce businesses like Ola Money, FreeCharge, Flipkart Wallet. Ola Money, the payment portal for Uber’s archrival in India and popular transportation app Ola Cabs, reported a 1500% jump in money added to the accounts in less than 4 hours.
To sweeten the deal further, these companies are going all out by providing tempting offers. For example, FreeCharge is advertising a variety of cash variety of cash back schemes for using the service, Paytm is offering Rs. 1000 cash back on flight bookings and a flat fee of 1% on all transactions.