Mobile payment transaction volume in India is expected to grow more than 90% each year over the next five years, with digital payments becoming the “de-facto payment mode” in the country, in the wake of the government’s withdrawal of Rs 500 (US$7) and Rs 1,000 ($14) notes.
The transaction volume will have a compound annual growth rate (CAGR) of more than 90% to reach 153bn by 2022, a joint study conducted by The Associated Chambers of Commerce of India (Assocham) and research firm Rncos reveals, rising from 3bn this year.
The value of mobile payment transactions is also likely to register a CAGR of 150% and hit more than Rs 2,000tn (US$29.5tn) over the same period, compared to Rs 8tn in 2016.
Indian mobile financial solutions provider Mahindra Comviva’s Srinivas Nidugondi told NFC World it would “push new users to adopt digital payments and acceptance which will result in a surge in digital transactions, making it the de-facto payment mode”.
“We have already seen an increase in adoption of mobile POS, where our customers have reported a 500% increase in order for POS devices. Similarly, we have seen an upswing in the number of users that are upgrading from no-KYC to KYC wallet users to benefit from the higher thresholds allowed for monthly transactions.”
“We welcome this courageous move by the government to demonetize cash,” the senior vice president and head of mobile financial solutions adds. “We believe that this is the right step towards tracing and eradicating black money as well as counterfeit currency.
“Digitization will not only improve accountability and transparency, but will also address a social issue such as corruption and will impair the informal money market. The biggest winners from this initiative are the wallet services providers like ICICI, Paytm and Mobikwik who have joined the online wallet bandwagon early.”
The Reserve Bank of India (RBI) made the official announcement last week, closing down ATMs across the country to facilitate the change and informing Indian consumers to exchange their Rs 500 and Rs 1,000 notes at any office of the RBI or bank branch to obtain the value of their cash into their respective bank accounts.
The move is an attempt to tackle counterfeit crimes and eradicate so-called “black money” from the Indian economy.
“For their immediate cash needs, these notes of value up to 4,000 rupees (US$59) per person can be exchanged for cash over the counter of these bank branches,” RBI says. “[The] public are advised to present a valid proof of identity for availing this exchange facility.
“Value credited to their bank accounts can be freely used by issue of cheques or by remitting through various electronic modes of transfer like NEFT, RTGS, IMPS, mobile banking, internet banking etc.
“Any person who is unable to exchange or deposit the specified banknotes in their bank accounts on or before December 30, 2016 shall be given an opportunity to do so at specified offices of the Reserve Bank or such other facility until a later date as may be specified by the Reserve Bank.”
There have been chaotic scenes in the country following the withdrawal of the rupee notes, with some banks running out of cash, BBC News reports.