If you are someone who remains up to speed with happenings around the world, there’s no chance you’d have missed the news of demonetisation and digital payments in India.
On 8 November 2016, the Indian Government announced demonetisation of all ₹500 (US$7.80) and ₹1,000 (US$16) banknotes of the Mahatma Gandhi Series. The government claimed that this action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash that fund illegal activity and terrorism. The sudden announcement and prolonged cash shortages in the weeks that followed created significant disruption throughout the economy, threatening economic output. Instead of going to work, people were seen standing in long queues outside ATMs and banks across the country, resulting in the economy almost coming to a standstill.
Following Prime Minister, Narendra Modi’s demonetisation announcement which sucked out 86% of the country’s currency in circulation, struggling mobile wallet companies became sudden overnight beneficiaries and heroes of India. The founder of one such company, Vijay Shekar, found himself intensely in demand and Paytm soon became India’s largest mobile payments startup. The dream run began when small shopkeepers, petrol pumps, vegetable sellers, tuk-tuk drivers and even sex workers in India lapped it up and started using Paytm as the only mode of money exchange. The traffic on the app increased by a whopping 435%, downloads grew 200% and there was a 250% rise in the overall transactions and transaction value. Can you even begin to imagine the numbers? We’re talking about a billion dollar industry here!
As smartphone users in India have reached an estimated 299.24 million, Modi’s dream of a ‘Digital India’ is materialising. According to Morgan Stanley, mobile wallet transactions were $9 billion in April 2017, versus $1 billion just two years ago. From mobile recharges, paying utility bills to purchasing movie tickets, flight tickets and even paying vendors on the street or mall, mobile payments are taking over in India. Somewhere in Noida’s Sector 5, in a nondescript building on a noisy, dusty, mosquito-infested road, that’s too narrow to be called a highway but too wide to qualify as a street, where rickshaws and pedestrians compete with speeding SUVs, a revolution is churning. And it’s spreading like a wildfire, named Paytm.