But will this actually benefit digital payment and wallet companies?
GN Bureau | November 9, 2016
Digital payment companies have hailed PM’s decision of banning high denomination currency notes (Rs 500 and Rs 1,000) as a major step towards cashless economy.
“This is the time to say no to cash and so do to corruption,” Vijay Shekhar Sharma, founder of India’s largest digital payment service PayTM, told Forbes India.
Meanwhile, popular digital payment platform Freecharge summarised the government’s decision by tweeting, “Cash is so yesterday”.
Calling it a historic moment, Bipin Preet Singh, CEO of MobiKwik, in a statement to media, said, “Within a 50 day period a billion Indians will change their payments behaviour - we will move from cash only to a cash-free economy. This is a strong step taken by the Modi government and will benefit the growth of digital payments and digital banking in India. We are excited to be a part of this historic moment."
“The move will create a great hook to habit for adopting wallets in our everyday lives,” said Sunil Kulkarni, Deputy MD, Oxigen mobile wallet. He added, “Oxigen has more 200,000 touch points across India which load cash. This can facilitate people to convert their cash to digital in their wallets. So the adoption is not restricted to tech savvy consumers in Urban and tier 1 cities bit in tier 2 and rural areas where we have also our footprint.”
But will the decision of the government actually benefit digital payment and wallet companies? The government, first of all, is not doing away with cash. So this decision cannot be hailed as a move towards cashless economy. In place of the banned Rs 500 and Rs 1,000 notes, new notes of Rs 500 and Rs 2,000 will be issued.
“This will not take us closer to the cashless world. This could be viewed as a way of pushing the post-cash electronic payments world forward. However, the institutional foundations of the new world have to be laid, and only at the tail end of that process, a certain use of coercion works okay,” Ajay Shah, professor, National Institute of Public Finance and Policy (NIPFP), writes in his blog.
“This is a surgical strike against the people who have inventories of the old notes that can't be shown to the authorities. Those people will find ways to fence those suitcases of cash, and suffer monetary loss in the process,” he writes further.
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