THE fintech companies behind India’s cashless economy are the big winners after 500 and 1000 rupee notes were taken out of circulation overnight.
The sudden announcement by Prime Minister Narendra Modi on Tuesday night was designed to tackle so-called “black money” – money earned on the black market on which no tax has been paid – and counterfeit currency.
But it had unplanned benefits for the start-ups trying to convince Indian’s to give up cash altogether. Industry leader Paytm saw traffic increase 435 percent since Tuesday and a 200 percent hike in downloads of its digital wallet app.
“We are seeing a massive adoption for offline payments, which will solve major problems in a situation like this,” Paytm CEO Vijay Shekhar Sharma told The Times of India.
Online payment firm PayU said it had seen an 80 percent jump in transactions in the first few hours on Wednesday compared to a day before and digital wallet provider MobiKwiksaid it had seen a 40% increase in downloads within 18 hours of the announcement.
It’s not just fin-tech startups that could benefit though – online market places in India offer cash-on-delivery but this is a major headache for them. Following the news market leaders Amazon and Flipkart have temporarily restricted the service and have announced they will use the opportunity to persuade customers to transition to digital payments.
— Flipkart Stories (@FlipkartStories) November 9, 2016
Snapdeal however wasted no time in announcing a new “Wallet on Delivery” service in collaboration with online payment provider FreeCharge, which it owns. Customers will be able to use their FreeCharge digital wallet to pay at their doorsteps.
Elsewhere a host of start-ups took advantage of people’s eagerness to get rid of cash, safe in the knowledge notes could be exchanged at the bank after two days. Food tech start up Box8 saw orders triple by midnight on Tuesday.