As the country scrambles in a massive cash reduction, India mobile payments are taking off as an alternative.
Mobile wallets have received an almost instant shot in the arm with the surprise notice of the disappearing banknotes.
Some mobile payment providers have already reported record breaking numbers over the last few days.
Paytm, for instance, the largest India mobile payments firm, reported more than seven million transactions on Saturday alone. This easily broke its previous records. The Alibaba backed firm currently claims to have about 150 million users. The figure makes it the clear leader in the country. MobiKwik is the next closest competition with a sizeable but much smaller 35 million users.
Still, both mobile wallet companies have reported a spike in their new registrations since the cash struggle began. The cash scramble occurred when the country’s Prime Minister Narendra Modi suddenly chose to eliminate the 500 and 1,000 rupee notes. This instantly cut off 86% of the cash in the country.
This is particularly true in larger cities such as Mumbai. There, the cash shortage has led people to scramble to use a cashless payment method. As the vast majority of people have mobile devices, smartphone payments have become the prime alternative. The main challenge those consumers are facing is in adoption of the technology by merchants.
While mobile payments are easy for consumers to implement, they are finding that many places don’t accept them. Since the majority of merchants in the country also don’t accept credit cards or debit, this has been leaving shoppers in a lurch.
Many Indians are trying very hard to hang onto the small amount of cash they can get into their hands. The reason is that the banknote shortage is extensive. Whenever possible, cashless methods are being used, just so the cash itself doesn’t need to be spent. Once India mobile payments are accepted in more locations, it may help to take the pressure off this situation.