Updated: November 14, 2016 1:04:33 pm
With the government demonetising Rs 500 and Rs 1000 notes, and replacing them with new Rs 500, Rs 2,000 notes, and another Rs 1,000 note on the way soon, there’s a liquid cash crunch in the country. While people struggle to get some cash in order to pay for daily necessities, digital wallets in the country are seeing this as an opportunity to increase consumer base and boost usage. Paytm and MobiKwik, which are two leading digital wallet players, claim to have seen a boost in usage with the new demonetisation scheme.
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Paytm says it has hit a record number of payment transactions at 5 million a day and will process over Rs 24,000 crores, which is more than any other payment network in the country.
The country’s biggest digital wallet also claims it has seen 700 per cent increase in traffic with app downloads increasing by three times. According to numbers from Paytm, they’ve also seen a 1000 per cent increase in money being added to Paytm accounts. More importantly offline payment transactions have increased five times and Paytm claims the number of transactions per user went up from 3 to over 18 transactions in a week.
Paytm says that day two of demonetisation saw transaction values increase on the app, and it is now 200 per cent of the average ticket size. They also claim to have 1 million new saved cards in the two days since demonetisation.
Interestingly rival MobiKwik claims to have seen an 18X increase in overall transactions, and over 2000 per cent increase in addition of money and transaction value. MobiKwik also says their travel partners like Lemontree, Makemytrip, IndiGo, cleartrip and Yatra saw a surge of 300 per cent in transactions via the wallet along with Big Bazaar, Grofers, Big Basket etc.
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The company also says it saw a 40 per cent growth in app downloads within 18 hours of Rs 500 and 1000 notes being demonetised by the government. MobiKwik claims it will easily hit $10 billion in payments volume by 2017 thanks to this sudden boost. The app will soon be accepted at over 1 million merchants in the coming thirty days.
The advantage that some of the wallets enjoy over using a debit card is that they offer a lot of cashback, deals and offers for users every time a transaction is made. The deals are quite good especially when a user does a big-ticket transaction like say book flight tickets. This could also explain why some users are preferring to rely on them, rather than just their debit or credit card.
However, digital wallets come with a limit of Rs 10,000 per month for non-KYC customers, and only those who get an eKYC done can add up to Rs 1 lakh in their digital wallets. While it is not clear if this cash crunch will result in a permanent growth for these players, for now they are proving to be a good alternative for many customers.