While the recent demonetisation drive by the government might be seen as a bold step towards a cashless, digitised economy, the resulting cash crunch has seen a steep rise in the use of digital wallets.
As per latest reports, Paytm registered more than two million transactions a day soon after the demonetisation drive was announced by the government. Another digital wallet company-MobiKwik has claimed 100 per cent growth in its users giving an indication that digital wallets are fast becoming an alternative channel to cash payments on a large scale.
The fast adoption of digital payment methods may be good news as experts believe that it will help to deal with the challenges posed by black money and also help in widening the tax net and thereby resulting in lowered taxes in the long run.
With digital wallet payments becoming a popular alternative to cash based transactions, the crucial question to answer is: will the digital wallet companies sustain the rush of customers which they are witnessing currently once the cash inflow goes back to normal.
Expressing his faith in the alternate payment system, which the digital wallet companies have build over the years and terming them capable of handling the ongoing cash crunch, Santosh Desai, Columnist and Brand Consultant says, "There is no reason to believe that the digital wallet companies are not geared to tackle this surprise move by the government and handle the unprecedented spike in business. In my view the digital wallet companies will maintain the interest and sustain it even after the cash flow is restored with the help of incentives until a certain threshold is achieved, thereby cultivating loyal a customer base in the process. Also, this move is not going to result in mass adoption of the cashless payment options, that phase is still 2 to 5 years away. It will only boost the sentiment for cashless transactions."
Commenting on the move, Sanjay Sethi, CEO, ShopClues.com says, "Demonetisation is not just one thing, it is the build of many things that have happened and it is amazing. Population is becoming our biggest wealth and inclusion of common man into finance and economy are ground breaking things. Our business from smaller cities has seen about 15 per cent increase though there are some supply chain hiccups because of low liquidity. But overall I think it is moving in a very good direction and the bottom line impact will be very far reaching. Even the investors are looking at it as a fundamental change in the ecosystem. This move has made the merchants more aware about the need for digitisation plus if you can't digitise you can't scale and digitisation is very important for scaling to happen. In the short term the top line does take a hit but our platform monetisation has skyrocketed. Moreover this move has forced many offline businesses to come to digital platform which in the long run is going to be beneficial."
