On a regular evening of November 8th, 2016, when people were done with work and getting home around 8:00 pm IST, an announcement from the Prime Minister Narendra Modi forever changed the Indian economy. The Government of India had demonetised all the INR 500 and INR 1000 notes which constituted to almost 86% of the total cash. India which was the most reliant on cash and faced the biggest crash crunch ever. In one of the world’s biggest economy, almost 95% of transactions were cash, 90% of vendors dint have means to accept electronic payments, and half the population dint have bank accounts. So a common man couldn’t buy and an average business dint have means to receive payments.
The aftermath of demonetization resulted in pushing the country towards the use of electronic wallets. Many new bank accounts are being opened, mobile wallet payments and other e – payment services saw a surge in users.During the dawn of this cashless society the sole beneficiaries are electronic payment firms which have seen in sudden rise of new customers. India’s major mobile payment company PayTm backed by chinese e-commerce giant Alibaba reported a 700% increase in traffic with about 500 million transactions in a single day. MobiKwick, Freecharge, Oxigen Wallet are other leading electronic payment companies who also saw a sudden increase in users.
Street vendors also have opened up paytm accounts with machines outside their shops claiming to accept e-wallet. The whole move of demonetisation is a boon for electronic payment companies. Ofcourse the wide use of smartphones and internet has been the core support element for these digital transactions. There are many innovative solutions coming up from various sectors trying to implement their own systems. India has broadened its digital economy, striving for technological advancements in the digital payments and hence would be a good base for any fintech startup.
Reference:
http://www.forbes.com/sites/wadeshepard/2016/12/14/inside-indias-cashless-revolution/#132ebda618c7