Demonetization Game: People, Virtual Wallet and UPI

written by HiveMinds Official

on November 28, 2016

A look into the after effects of demonetization, rise in payment through virtual wallet payments and how UPI is going to be the game changer.

While demonetization as a move can be analysed to death for its Pros and cons, we really admire the web community and startup community that has come together to address the situation in its own unique and resourceful ways. We saw this during the Chennai floods, and time and again during moments of crisis, this is one such instance.  Here are some of the web-resources that we believe will ease Demonetization woes – and maybe quicken the adoption of the ‘Less-Cash’ movement.

Few initiatives worth mentioning

Google ATM locator:

Google’s “ATM locator“ feature has been most useful tool for people. Type “Find ATM near you” and google will fetch details of all the ATMs in your close proximity. After you click on one ATM google will show the details and status of ATM cash availability.

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Paytm Nearby:

Paytm has launched a new feature called Paytm nearby on the updated version of their app which helps people find nearby merchants who accept Paytm cash.

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CashNoCash.com

CashNoCash.com provides the real time statuses of cash availibility at your nearest banks, ATMs and post offices. User needs to enter the current city and CashNoCash.com will fetch the result with available locations with the approximate wait time.

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ATMBot - Coimbatore based start-up Timebender technologies has launched a chatbot on FB called ATMBot. It tells the availability of cash for nearby ATMs.

Walnut- Finance management app Walnut added a new feature which tells the availability of cash for an ATM by tracking aggregate ATM withdrawals for any ATM across India in realtime.

Hashtags such as #OpenATMBlr are talking about ATM situations in the city.

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What to do with old notes:

Another FB messenger bot from an Indian firm named gupshup walks user through the process of changing the older notes. It also answers the queries from user.

Brands which have made better use of this situation:

It is an important step to move away from the shadow economy to a more transparent one.

The decision to demonetize higher denomination notes in India has worked out in favor of digital wallet companies like Paytm and FreeCharge.

PhonePe is one of the brands that has made better use of this opportunity. One such example can be seen in following tweet.

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Freecharge was another company to put out discount and cashback offer for payment done through their portal.

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Local vendors and small scale retailers joined hands with Paytm to deal with cash crunch in the market.

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Taking the opportunity Paytm did some aggressive marketing campaign to lure customer to try their virtual wallet. Paytm saw a significant rise in their user base, details of which are as follows:

- 435 % increase in overall traffic

- 1000 % growth in money added to wallet

- 400 % growth in transaction value of offline payments.

- Crossed the mark of 50 million app downloads.

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Way Forward (Virtual wallet vs UPI) :

The fact that the trend has always been low value-high volume transactions in the online space is likely to change in future. Now both transactions of large and small value will become equally important in the digital space. To cater to the changing need RBI launched Unified Payments Interface (UPI) earlier this week. UPI is a payments architecture poised to change payments in the country and will allow users to make a transaction without divulging their account details and IFSC codes through aliases (such as shashidhar@hdfcbank).

However, there are many reports which say that the UPI would effectively kill wallets’ business. The UPI would effectively turn a bank account into a wallet and would provide the convenience of the same.The UPI has a more simplified two factor authentication where a user has to enter the registered mobile number with the bank and a mobile PIN. It is simpler than the number of hops a transaction has to go through payment gateway for a card or net banking transaction.

Demonetization decision is a wake-up call for digital companies and suddenly has converted tens of thousands of people into digital consumers and this transformation is a huge business opportunity in digital space. When the dust of demonetization settles down, hope the end user gets the benefit of UPI introduction and virtual wallet companies raising their game.

Do you have something to say about demonetization? Share your thoughts with us on Twitter @_hiveminds and we’ll be sure to reply! :)