Link to Lauren Razavi’s backchannel.com post “India Just Flew Past Us in the Race to E-Cash”. Hat tip to slashdot.com and Joseph Kimball
What India’s government did in demonetizing the 1000-rupee and 500-rupee notes was a mess. But it did have the helpful effect of spurring mobile payments, both by the current inconvenience for paper currency and, as people look toward the future, reducing trust in paper currency.
Two quotations from Lauren Razavi’s backchannel.com article linked above flesh out that story:
1. All of this has created a newfound system that practically incentives mobile payment. With so many people queuing up at banks every day — and a lot of Indian bureaucracy to wade through in order to open a traditional bank account or line of credit —the appeal of more convenient digital alternatives is easy to understand. According to a report in the Hindu Business Line, as many as 233 million unbanked people in India are skipping plastic and moving straight to digital transactions.“Cash has lost its credibility and payments are no longer perceived in the same way,” says Upasana Taku, the cofounder of Indian mobile wallet company MobiKwik, which reported a 40 percent increase in downloads and a 7,000 percent increase in bank transfers since demonetization. “There’s chaos at the moment but also relief that India will now be an improved economy,” she says.
2. Before last month, Paytm, a mobile app that allows users to pay for everything from pizza to utility bills, saw steady business—it was processing between 2.5 and 3 million transactions a day. Now, usage of the app has close to doubled. 6 million transactions a day is common; 5 million is considered a bad day.