After the demonetisation drive by the Prime Minister of India on November 8, 2016 the growth in the usage of E-wallets has skyrocketed. On November 8th, PM Modi declared that the government was withdrawing all 500 and 1000 rupee notes that were in circulation. This accounted for nearly 85% of the total cash in circulation in India. These notes became invalid starting midnight of November 9th.
Facing a cash crunch, mobile wallets have seen a rise of nearly 400% in their usage. PayTM, a One97 group run mobile wallet, has been at the receiving end of reaping the benefits by this move. In a statement, it said that the company has registered over 300 percent growth in offline store transactions in just six days after the announcement by the PM. This move caused a cash crunch among the citizens. FreeCharge, in a statement said that it has registered a nine-fold jump in merchant transactions on its platform, and MobiKwik, another popular wallet in India, reported an overall 18-time increase in its transaction volumes. Shopkeepers, vegetable sellers, petrol pumps and even retail workers lapped it up. Paytm’s traffic increased by 435%, app downloads grew by 200%, and there was 250% rise in overall transactions and transaction value.
Similar scenes are playing out among merchants that act as payment gateways. PayU, India’s payment gateway registered 1.2 million card transactions a day post demonetisation. Rau, the CEO said that 98% of the volume of transactions was on cards and 2% of it was on wallets. The sale of POS machines has also sky-rocketed, with many banks stating that they are out of stock, and that they have placed orders for more machines which are on their way.
However there is a worry that when cash returns to the system, many would stop cashless transactions. However, Paytm’s CEO Vijay Sharma isn’t worried, insisting that mobile wallet is becoming a habit which will stay.