Skip to main content

Note ban: New-age startups exult, claim jump in digital transactions

The demonitisation may also push more people online, make India "data rich" and facilitate a transparent credit ecosystem, according to experts

India deciding to scrap existing currency notes of Rs 500 and Rs 1,000 is being welcomed by the country’s fledgling fintech and online commerce startups like manna from the heavens.

They’ve rushed to capitalise on the hype around the cash crunch people are facing by promoting their own cashless payments and related services. Many have claimed big jumps in the volume of transactions they now see on their platforms, as India’s smartphone-toting English-educated urban households look at digital payments more seriously.

The other choice is standing in long, serpentine queues at banks to exchange their old notes for the freshly minted versions that the government has released.

“OptaCredit has seen a 300 percent increase in loan applications after the government’s announcement of banning Rs 500 and Rs 1,000 currency notes,” an online lender who loans money to people based on employer data, said in an emailed statement to Forbes India. The startup, founded by a former executive at Royal Bank of Scotland and consultancy EY, S Kumar Srivatsan, is operating with a seed funding of $500,000.

Paytm, India’s largest mobile payments company, took out front-page ads in various national dailies, thanking Prime Minister Narendra Modi for his “bold move”. Rival Freecharge says it saw a “12 times jump overnight in the average wallet balance” among it mobile wallet users.

Modi’s announcement, made on November 8, “is the biggest boost to creating a cashless India”, Freecharge’s CEO Govind Rajan said in a press release. “The 12x surge we have witnessed is unprecedented and clearly driven by this big announcement,” he said.

Freecharge is part of Delhi’s Jasper Infotech, which operates the online commerce site Snapdeal. The company, on Thursday, rolled out a “wallet on delivery” option for customers, doing away the need to pay cash on delivery, it said in a press release. Customers could use their FreeCharge wallet to pay for their orders instead, after delivery. Snapdeal expects to cover all its customers in the country over the next few weeks with this service.

Over the last two years, India has seen a surge in fintech startup investments as more services have become digital payments-friendly than ever before. A smartphone boom in the country, helped by affordable 4G smartphones that aggressive Chinese vendors have flooded the country with, has added impetus, while wireless providers have slowly started expanding their services.

Widespread adoption of digital finance, or smartphone-based payments and financial services, could increase the GDPs of all emerging economies by 6 percent, or a total of $3.7 trillion, by 2025, consultancy McKinsey & Co says in a September report. This is the equivalent of adding to the world an economy the size of Germany, and could create up to 95 million new jobs across all sectors of the economy, McKinsey says. Lower-income India could add as much as 10 percent to 12 percent.

The note ban is already prompting some fintech companies in India to revise their own growth projections. MobiKwik, a mobile wallet provider that competes with Paytm and Freecharge, among others, expects to “easily hit $10 billion in payments volume by 2017”, the company said in a press release. “We were earlier trending to process $1 billion in payments by 2017,” it said.

“Discontinuing the Rs 500 and Rs 1,000 notes, apart from being a welcome attempt to curb black money, is also a great step towards redefining the credit ecosystem in India,” says Abhishek Agarwal, CEO of CreditVidya, a credit-risk assessment services provider.

This step “will push many individuals to transact online,” Agarwal says, due to the relative convenience. And as digital wallets evolve and acceptance of debit/credit cards increases, India will see significant expansion of the cashless economy and deepening of the digital footprint of consumers. This will in turn facilitate more accurate evaluations of creditworthiness of loan applicants, and “enable instant credit decisions by banks and other lenders”.

Agarwal added: “This is a laudable step on the part of the Reserve Bank of India as it will make India 'data rich' and consequently, enable millions more to access transparent and affordable credit.”


Readers Choice

Lead Your Team Into a Post-Pandemic World

During the Covid-19 crisis, I’ve spoken with many CEOs who have shared that a key priority for them, naturally, has been the safety and well-being of their employees. And there are many examples of inspiring actions taken by CEOs and companies in support of their employees. But as we’ve come to recognize that this crisis will last more than a few short weeks, companies are now defining their approach for the long haul. I’ve seen two crucial ideas take hold with corporate leaders. One: Given the magnitude of the shock and the challenges that this crisis represents, companies must consider the full breadth of their employees’ needs as people. Safety is essential, of course, but it’s also important to address higher-level needs such as the want for truth, stability, authentic connections, self-esteem, growth, and meaning in the context of the crisis. Two: Many CEOs have begun thinking about this crisis in three phases. They may assign different names or specific lengths to t

4 Ways Google Search Can Help You Achieve Your Marketing Goals

Google Ads Google Ad extensions are a great way to add key descriptive text without taking up space in your actual ad and improve your quality score for even better results. It’s a win-win right? Google Maps Is your business discoverable on Google Maps? For small businesses, adding detailed information and the use of strategic keywords can be helpful for a better location optimization. Google Ranks SEO is vital for moving up in Google rankings. To climb up the ladder, incorporate top keywords in page titles, meta tags and focus on consistently delivering relevant content. Backlinking If SEO is the the only strategy you have, it is the right time to change that. Start adding backlinks to your content. Quality backlinks can further increase your brand authority. 

Twenty Smart Business Buzzwords

Some words may grate on your nerves, but business leaders are still using "disrupt," "synergy" and "ideate." You should too. Spend any amount of time in a corporate environment and you'll likely notice there are some words that seem to come up on a daily basis. Certain verbiage becomes part of the  corporate culture  and soon, you may feel as if you need to use it to fit in. While they can change from one day to the next, most corporate buzzwords have a positive meaning. They're used to boost morale and motivate everyone involved in the conversation. Here are 20 of the top business buzzwords that you should make an effort to work into your vocabulary. 1. Impact Impact is a powerful word that has become a favorite of business professionals.  Grammarians argue  that the word is being used improperly, urging you to use "affect" instead, but businesses love it. 2. Corporate Synergy Half of the people who use this term likely