With the ongoing cash crunch, digital money gets another lifeline

After a lull for months, things might be again looking up for the country’s digital money entities, due to the ongoing cash shortage.

After demonetisation, the sector had a shortlived dream run, from November 2016 to mid-2017. According to the Reserve Bank of India’s data on prepaid payment instruments (a chunk of which is mobile wallets), these collectively clocked Rs 38.3 billion in transactions during January, falling to Rs 36.5 billion in February. The March numbers are not out, but might fall again - many users stopped using mobile wallets after the February 28 deadline for getting the know-your-customer (KYC) checks done by mobile wallet entities. Many had decided not to get this done and, say observers, the digital money space had lost almost 45 per cent of its user base.

As news of no-cash flooded social media sites and news channels, the past 24 hours have seen a surge in people queuing to get the KYC done. In fact, “over the past few days, we have seen a surge of 27 per cent in our digital payments, as well as QR-based payments to merchants, primarily driven by consumers in regions where the cash crunch is acute. We are also seeing a 33 per cent increase in KYC and eKYC requests,” said Upasana Taku, co-founder and director, MobiKwik.

“Our initiatives to increase eKYC infrastructure at retail points is gradually increasing digital wallet remittance transactions. We are hopeful of getting the same volume as on February 2018 in the next two months,” said Praveen Dhabhai, operations head at Payworld.

One97 Communications, owner of the Paytm brand, offers multi-source and multi-destination payment solutions. It says it has seen a 30 per cent surge in transactions from several cities, compared to last month. This growth has come from major parts of Andhra, Telangana, Bihar, Gujarat, Assam, Karnataka, Maharashtra, Rajasthan, Uttar Pradesh, and Madhya Pradesh.

“With the ongoing cash crunch, customers are using more of our services, which has led to growth in money transfers and QR-based payment in cities where ATMs have gone dry,” said Kiran Vasireddy, its operations head.