NEW DELHI: Mobile wallet brands, at least, are benefiting from India's "demonetisation" as consumers seek out alternative payment options after the government scrapped large denomination banknotes.
A week after the unexpected step – aimed at cracking down on corruption and tax evasion – the country's digital payment businesses are seeing increased take-up, especially in urban areas, the Financial Times reported.
"We have seen unprecedented growth over the past few days," said Kiran Vasireddy, senior vice-president at Paytm, adding that 70-80% of customers were in urban areas.
Since 8 November, the company claims to have seen 4m people start using Paytm wallets, while traffic to its site has leapt 700% and app downloads are up 300%.
At MobiKwik, app downloads have increased 200% while the amount of money being added to wallets has gone up nearly 2,000%.
"This is going to change the industry forever," said Bipin Preet Singh, co-founder of MobiKwik. "The tipping point will be when 50% of the population is cashless, and I now think that could happen in one to two years."
Oxigen, meanwhile, reported that wallet download and load value on Oxigen Wallet prepaid visa cards had increased fourfold, while daily registrations were up 120 times.
Sunil Kulkarni, deputy managing director of Oxigen Services India, noted that three quarters of transactions were taking place in urban areas and that the most active users of mobile wallets were 25-35 year-old men.
While there are also options via traditional banking brands – debit and credit cards, internet banking and the immediate payment system (IMPS) – many consumers do not have a bank account; but adopting mobile wallets will bring them into the financial mainstream.
"This is much larger than just a historic moment on the path to going cashless," said Gaurav Raina, joint secretary at the Mobile Payment Forum of India.
"It also means that a whole section of society can start to build up a credit history and then get loans and insurance products," he added. "The eventual goal is full financial inclusion."
Data sourced from Financial Times, India Info Online; additional content by Warc staff