Indian E-commerce Gears Up For A Cashless Ride!
While the youngsters
were busy celebrating #NoShaveNovember, Indian Government played the
spoilsport by making it a #NoCashNovember. It was still midnight when
Indian government scrapped Rs500 and Rs1,000 banknotes and introduce
new notes. People who were carrying notes - suddenly felt at a loss
of it. Some see it as a manipulative political move. Some call it all
a part of conspiracy. Some have applauded this move as the most
important step towards a corruption-less nation. Some even call it a
work of Illuminati.
However, people
didn’t realise that this “cash-lessness” of notes
is an indirect gain of “cashless industry”. Earlier, people had
to wait for cash on delivery systems. Infact, this system was already
in a declining stage. And this move, only strengthened cashless
transactions. This move, saw a spike in all cities, big and small,
pan-India, consisting of small merchants. The most positive signs
were seen in Indian e-commerce industry.
With the ever
increasing reach of smartphones and ease of access to the internet.
This move only encouraged the adaptability of electronic
transactions. Which was slowly growing in India. People are now
comfortable transacting using mobile wallets and swipe cards at
point-of-sale (POS) terminals and not just using them to withdraw
money from ATMs. The regulatory policies towards digital payments
have been supportive as well. Paving the way for new
opportunities—cases in point are the Unified Payment Interface
(UPI), the Goods and Services Tax (GST).
The latest study by
the Internet and Mobile Association of India (IAMAI) has, found that
at a CAGR growth rate of about 30 percent between December 2011 and
December 2015, Indian digital commerce stands at Rs 1,25,732 crore.
Online shopping is valued close to Rs 76,396 crore. Also, the 76
percent shoppers who were still preferring to pay by cash-on-delivery
(CoD) - this move gave the e-tailers a weapon to fight off.
Several areas in
which India is trying to improve its digital economy, started
technologically advanced digital payment systems. Increased merchant
acceptance, improvements in UPI - allows monetary transfers between
any two bank accounts via a smartphone, as well as a reduction in
cash-based transactions. These changes indicate towards a more
cashless driven society. Even the vegetable vendors on the streets
have opened up ewallet accounts and have a machine outside their
shops where customers can scan the barcode and make the payment. A
lot more retail outlets are accepting ewallets. Which is almost
considered revolutionary, and survival of the fittest.
That being said,
electronic payments systems has also sparked some very innovative
solutions. The farmers’ markets of Telangana began experimenting
with their own electronic payment system. Where customers with
Aadhar-linked bank accounts could buy vegetables using tokens.
Purchased via debit cards at specialized kiosks. This has given a
major push to non-cash transactions such as credit/debit cards,
mobile wallets, Bitcoins and UPI.
Ecommerce giants,
mobile wallets and technology firms that provides alternate payment
methods (digital payments) has seen a heavy surge in their revenue.
Because of demonetization people sought to digital payments to avoid
waiting in long queue outside banks or empty ATMs. In addition to
people who are getting into digital wallets, the digital payment
firms gave good deals and tempting offers in order to drag people’s
attention.
Indian ecommerce
industry has been in for a serious hit. So, what actually explains
the motto behind this move? A cashless nation? A digitalised nation?
There were ewallet companies which hugely cashed in with the cash
ban. A national cashless payment system set up by leading banks
totalled up a mere 250,000 transactions in the first week of
December. It saw 7 fold rise in its online traffic.
The sector which was
collapsing as investors started moving out, is flourishing now as
well. But will this sustain for a longer time? Will it have the
desired effects on the country? Imagine an India where all merchants
can digitally sign up for a tax number, report sales and submit
returns real time. This requires digitization of every business.
Though the bigger picture is not clear, demonetization is a
ground-breaking move for our country and this will lead to one of the
major ripple effects in its economy.
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