With Prime Minister Narendra Modi taking the entire nation by surprise on November 9 when he announced the demonetisation of Rs 500 and Rs 1000 notes, the first ones to encash on the decree were the mobile wallet companies. Within just a few minutes of the announcement, players such as Paytm, Freecharge, MobiKwik, Ola Money and others, came out with quirky social media posts to engage with their customers and urged them not to panic and instead go cashless. On the following day, full page ads in national dailies were also taken up these players, where they pledged their support to this policy and spoke about the ease of cashless transactions.
Paytm used Narendra Modi’s picture in their ad campaign and congratulated him for taking the ‘boldest decision in the financial history of independent India’. Using the hashtag Ab ATM nahin, #PaytmKaro the brand ran full page ads in mainline papers.
Delhi CM, Arvind Kejriwal took pot-shots at the brand through his tweet where he talks about it being the biggest beneficiary of PM’s announcement. To which, the CEO of the company, Vijay Shekhar even responded.
Upasana Taku, co-founder, MobiKwik, said, “I believe this is the best marketing campaign which India could have asked for both fintech and mobile wallet companies. Yes we are promoting it in a big way because it has never happened before that the government is promoting cashless payments. It is a very opportune moment for us and we have just launched our print campaign ‘Khatam Karo ATM Shaytm. Switch to MobiKwik wallet for your daily spends’, which we will run for some time.”
While a lot of these brands are targeting the customers, PayU India comes to the rescue of small and medium businesses, who are also grappling with stress, post the sudden withdrawal of the above mentioned currencies from the market. The brand has launched two apps-PayUmoney Seller App and Sellfie, both aimed at enabling the merchants to accept payments digitally.
Increase in traffic, user base and merchant enquiries:
One of the major problems in this category has always been awareness, but after the PM’s announcement, all the mobile wallet companies have seen a tremendous increase in traffic, in their number of downloads and the number of merchant enquiries have also seen a spurt.
Infact, Paytm saw an overwhelming 435 per cent increase in overall traffic as consumers increasingly took to using the Paytm wallets for their transactions. The company also registered a 200 per cent hike in number of app downloads and 250 per cent surge in number of overall transactions, all this within hours of the decision being made public.
Within 24 hours of this announcement Pay U India’s transactions increased to 85 per cent. Enquiries by merchants also shot up by 50 per cent. While the brand’s average daily transactions amount to 12 lakhs daily, they are anticipating the same to increase by 25 lakhs in the upcoming months.
Commenting on how this decision will impact the mobile wallets, Amrish Rau, CEO, PayU India, said, “I certainly believe that the recent announcement by the PM to remove Rs 500 and 1000 notes will have a positive impact on the use of mobile wallets in India. The market is maturing today, people have access to smartphones and internet and we only expect the infrastructure to improve henceforth. So, from an industry point of view we certainly foresee an increase in the utilisation of mobile wallets and digital payments adoption in India."
FreeCharge reported a sharp 12X overnight jump in the average wallet balance on the following day of the announcement, as consumers loaded up their wallets.
MobiKwik registered 40 per cent growth in app downloads within 18 hours of the announcement of currency withdrawal. Additionally, user traffic and merchant queries went up by 200 per cent among its over 35 million users.
Another e-wallet service, Oxigen Services witnessed significant increase in the load money transactions by up to 40-45 per cent during the first half of the day following the announcement and the company expects to see a spike in the short term. Sunil Kulkarni, Deputy Managing Director from the company said, “This situation is going to stabilise to a new normal which should be at least 40-45 per cent of the pre-announcement period. The average ticket size is also expected to jump by 50 per cent going forward. All this is because people will become more comfortable to adopt digital wallets for their cashless transactions.”
Wallet on Delivery:
A lot of the e-commerce companies have been facing the heat of the recent announcement as Cash on Delivery (COD) accounts for the bulk of online shopping in India. Most of these companies have temporarily discontinued their COD Services. In order to tackle this, FreeCharge has launched Wallet on Delivery, so Snapdeal customers can pay using their FreeCharge wallet on the delivery of their goods. MobiKwik also announced via email that it will offer a MobiKwik wallet on delivery option for online sellers. Paytm even mentioned on Twitter that it is working with courier companies to enable Wallet on Delivery, also known as Paytm on Delivery services.
Will the companies benefit in the long run or is their celebration short lived? Experts speak:
Commenting on this, Hitesh Gossain, CEO, Onspon.com, said, “Yes, the e-wallet companies are expected to benefit the most from this decision. This can already be seen from their marketing and advertisement pattern. This demonetisation decision was taken to curb the problem of unaccounted cash in the market and move India towards a 'cashless' economy. But definitely, there will be a major jump in the number of users using theses e-wallets, especially for the next month or so. They also provide an alternative payment mode to people who do not have bank accounts. With these e-wallets now integrated with all major e-commerce companies, this is a good opportunity for the e-wallets to make the users used to their payment method and make them repeated users. The long-term impact of this decision remains uncertain, however, the signs are encouraging for such companies.”
Rohan Agrawal, Senior Consultant at RedSeer Consulting, said, “Demonetisation is aimed at curbing black money and has brought liquidity crunch currently. This has led to sudden increase in usage of cash-less options (credit cards, debit cards, net-banking, mobile wallets etc.). Combine this with the infrastructure requirements and promotional offers, mobile wallets shall witness high trial and usage, which was already evident in the first two days. In the short term, the top nine markets will have higher usage of mobile wallets owing to liquidity crunch. In the long term, customer acquisition and engagement during the short term will help in overcoming the inertia and drive the awareness levels. It will definitely drive the adoption rates for the mobile wallets in the long term.”
According to Saurabh Uboweja, Brand expert, Founder & CEO, Brands of Desire, the biggest beneficiary of this announcement is not only the mobile wallets, but also the organised retailers like Big Bazaar, who have been actively promoting electronic transfers. “People who will suffer in the short term are the unorganised sector, like the local kiranas. But they will also join hands with e-wallets eventually. So today, where majority of the transaction happens in cash, I think by 2020, almost 50-60 per cent of transaction would be electronic,” he said.
But in a country, where 90 per cent of the transaction happens in cash and where half of the population don’t even have a bank account, how easy it is to change the behaviour of the consumers to shift to digital payments?
Gossain added, “This demonetisation decision is not against the usage of cash but against the unaccounted cash in the economy. However, ultimately and by default India is moving towards a cashless economy. Though, definitely there would be a change in the transaction pattern atleast in the short run, with inadequate liquid cash in the economy. However, in the long run, the transaction pattern would differ across income sectors. Majority of the lower sector of the economy do not have a bank account or do not have much knowledge about alternative electronic/digital payment methods. Therefore, cash would still play an important role for them. If we look at the upper and middle class, definitely, the usage of electronic and digital transactions would increase in the near future. But to say, there would be a dramatic shift in the transaction pattern is a little premature.”