India’s Prime Minister Narendra Modi has addressed the country and announced that the Rs 500 and Rs 1000 notes will no longer be a legal tender from midnight of November 8, 2016. The move was essential in order to fight the ‘black money’ issue in India. While the declaration is receiving a mixed response from citizens on social media, the tech industry has collectively welcomed the move. The ban on these denomination notes will move towards the cashless payment methods. This is a major step in line with the Digital India vision.
The cash has long been a king. While so, PM’s announcement to demonetize the Rs 500 and Rs 1000 notes has moved the economy towards a new era, the era of ‘Digital Economy’. At least, that’s what citizens like Vijay Shekhar Sharma- Founder of Paytm, Amit Somani- Managing Partner at Prime Ventures Partner, and Bipin Preet Singh- founder and CEO at Mobikwik are saying.
Most of the online shoppers buy latest mobiles, accessories, apparels, groceries, and other from e-commerce websites. The denomination of these notes might change our way of making payments in near future. Nowadays, a very small section of the Indian consumers prefers electronic payment over the traditional payment methods. The most preferred mode of payment on e-commerce purchase in India is still the ‘COD’ or cash on delivery. The COD mode of transaction adds the burden of logistics cost and risk on the e-commerce site. And hence, the move for decommissioning the higher-valued currency notes is welcomed by e-commerce industry.
Major E-commerce websites such as Amazon India, Snapdeal, and Flipkart have opted out the COD (cash-on-delivery) mode of payment options as the government demonetized the Rs 500 and Rs 1000 notes. When purchasing on the above-mentioned e-commerce sites, the users are advised to use their debit/credit cards or net banking to make a purchase of any goods.
The step from e-commerce majors is taken considering that the users will require lower denominations to buy regular day-to-day provisions. The banks will remain closed on November 9 and the ATMs are already running dry, buyers will likely to decline the delivery to save the cash for essential payments. The rejection of COD payments will put the brunt to these e-commerce websites and their vendors.
While so, the digital wallet and other electronic payment options might become the preferred payment method for online shopping in India. Paytm’s Sharma tweeted few minutes after PM Modi’s announcement, “The biggest, the boldest, and the most ambitious surgical strike by any government in the world. Hats off to our PM for removing ₹500/ 1000 notes.” Paytm is one of the most popular digital wallets in India.
He is obviously not the only one who feels this way. Naveen Surya who the Managing Director at itzCash has also stated that the demonetization of notes is the bold and much-needed step which will save the country from the disease of cash.
Resembling this, Rahul Gochhwal who is the Co-Founder at Trupay said that the most of the citizens will move towards the digital payment options during the exchange period of the phasing out old currency notes. A larger section of the population will opt for digital payments due to the bold move by Mr. Modi, he added.
Snapdeal’s CEO Kunal Bahl said that the company welcomed the Government’s move on the black money which will provide long-term benefits for the economy. The move will witness massive growth in country’s economy.