Dreams of a Cashless India


Demonetisation might have hit several businesses hard but FinTech startups and companies in the city would cash in on the situation as more and more people would now take to online transactions, and get accustomed to cashless life. As soon as big notes were scrapped from the market, mobile wallet provider Paytm saw an exponential rise in its transactions, with its downloads increasing 200 per cent and transactions value increasing by 250 per cent within 24 hours. This proves beyond doubt the mileage fintech companies and startups would get in new economic order to be unveiled post demonetisation.

From competing to joining hands, financial technology startups and banks are seeking more value in partnerships, especially in the context of the government pushing for faster adoption of digital payments. While banks and fintech startups may be on opposite ends as competitors there is huge opportunity to be unlocked through partnerships, said Sashank Rishyasringa, cofounder of alternative lending startup Capital Float that also announced collaboration with IDFC Bank.

While such tie-ups aren’t unknown, the government’s drive for cashless transactions as part of its crackdown on counterfeiting and illegal hoarding of cash is providing the impetus for more collaborations. They don’t see fintech players as competition but as partners to create solutions. Yes Bank, which has signed 36 partnerships with fintech companies for payments, lending, digital acquisition and customer service. As a bank, they have their own strengths around finance management, regulations, compliance and governance, while the startups are good with user interface, customer acquisition and technology solutions. The partnerships have helped the bank improve in parameters such as customer acquisition by 8-10%,( A spokesperson from the bank said).

RBL as a bank is tying up with its remittance partners including Oxigen, ItzCash and NuvoPay to allow its customers to do basic banking activities at their customer service points. Customers in rural areas can use such points for deposit, withdrawal, account opening and other services like bill payments. It had  even tied up with Ongo, a mobile wallet player, to allow auto-rickshaw drivers to accept QR code-based payments.

The fintech startups has partnered with Point of Sale (PoS) card machine vendors to provide merchants quick and easy access to loans. Under this offer, any merchant who is using the services of vendors like Mswipe, Petpooja, ICICI Merchant Services, MRL Postnet, Bijlipay and Pine Labs for transactions would be eligible for up to 200% finance on sales from their card machines. The merchant would be able to repay the loan as nominal percentage of their daily card settlements. Paytm has come up with “Paytm App POS”.  All the merchant needs to do is logon to Paytm app as Merchant and completes the process by clicking the Accept Payment App on their mobile. The point of difference is that in the Card Swiping Machine the merchant wouldn’t have to punch in the entire card numbers (only has to punch in the last 4 digits) however here he would have to punch in the card numbers or for that matter would ask the customer to do it.

Paytm has crossed 50 million downloads and currently has 150 million mobile wallet users. It has also hit 5 billion GMV and is currently clocking INR 120 crore worth deal daily. The number of transactions per user also went up from 3 transactions to over 18 transactions in a week. Now they are aiming to target 5 million merchants by the end of the financial year. Paytm is also trying to encapsulate this opportunity and is giving Hindi ads in National Dailies to reach the wider audience in PAN India.

Currently India has 750 Million Debit/Credit cards and against that there are only 1.4 Million POS Terminals. Hence there is a huge opportunity for the Fintech to plunge in into this market gap which is widened due to the Demonetisation of INR 500 and 1000 notes. Also recently RBI has increased the limit on the Digital Wallets from INR 10,000 to INR 20,000 and also have waived off all the service transaction fee from Cards, Mobile Wallets and Digital Payments.

The problem being faced by people after Demonetisation of 500 and 1,000 notes is not lack of cash but access to it. As ‘cash carrying’ will further be discouraged in future, people will automatically get adapted to cashless transactions. Therefore fintech companies and startups working in this segment will definitely get a boost in the near future. Online transactions are going to become the new norm in future, startups providing services like mobile wallets, online recharges and others will attract funding, pointed out experts. It is time for India to get digitized and this is an excellent opportunity to do so. I also see NFC as the future of digitization when people will just tap in their smartphones and make payments. That will be truly revolutionary. To sum it up we can say that digitization, mobile banking, and financial inclusion can play a tremendous role in any country to help its people sail through such difficult times, and implement a smooth demonetization process.


This article was written by Varnita Deep (PGDM, Batch 22, XIME-B)


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