As Currency Notes Lose Sheen, E-commerce Companies Push For Cashless Transactions

As prime minister Narendra Modi announced on Tuesday evening that currencies with denomination of Rs 1000 and Rs 500 will not be legal tender from midnight, e-commerce companies have left no stone unturned to cash in on the opportunity. They have proactively sent out messages to customers to avail of their cashless transaction facilities.

Online household services provider Housejoy sent a message to its registered customers, "Cash troubles? Use Housejoy app for cashless transactions for uninterrupted quality home services. Please avoid using currency notes of Rs 500 & Rs 1000 from today…"

Similarly, urban lifestyle services provider UrbanClap said, "Don't worry about your Rs 500 and Rs 1000 currency notes. Book your services on Urbanclap today and pay securely online both before and after the service."

Cheering Modi's move to abolish black money, Manoj Gupta, CEO and co-founder, Craftsvilla said, "It will definitely bring about a sea of change in the way transactions are done in India. And help strengthen the economy by wiping out black money and fake notes. While e-commerce companies that see a huge chunk of payments happening through cash on delivery (COD) mode will face some challenges in the initial few days, in the long run this move will only bring about positive changes."

For long, COD as a mode of payment has been a threat to all e-commerce companies as nearly all courier companies charge extra for collecting cash. Apart from extra cost, COD results in delays in payments and deliveries, higher returns and cancellations, and increased overheads and logistics costs. So, while COD is expected to hit e-commerce companies in the next couple of days, they are using this opportunity to get customers used to making payments online.

"With this, the quantum of India's economy moving through digital pipes will witness massive growth. Both Snapdeal and FreeCharge are committed to supporting all such initiatives," said Kunal Bahl, co-founder & CEO, Snapdeal.

Given that Indian consumers are increasingly beginning to get comfortable with online modes of payments, the government's move seems to have just come at the right time. As per a report by Google and Boston Consulting Group, by 2020, more than half of India's internet users will make digital payment, which will account for 15 per cent of the country's GDP.

As Padmaja Ruparel, president at Indian Angel Network says, "The market has just grown multifold for paytech companies. Innovative and credible companies of tomorrow can disrupt the way we transact today. Huge step towards Digital India."