Adoption of Mobile Money in Cashless India

The Indian Internet ecosystem had its challenges in 2016, parts of fintech has seen continued strong momentum. The number and value of transactions through mobile wallets have been growing at over 30% and 100%, respectively, and the mobile banking transactions, in volume and value, have grown at over 150% and 250%, respectively (for the period April-October 2016). The number of wallet users has already surpassed the number online banking users.

The demonetisation exercise has also helped these companies further, notably Paytm (the impact is not reflected in the numbers discussed above). It is yet to be seen Read the rest of this entry »

Why Consumers Spend More in Cashless Transactions ?

consumer-spending-indiaAcademic research indicates that digital mediums (credit/debit cards, digital wallets, etc.,) do not have cash outflow vividness, and hence reduce the pain of payment during a transaction in comparison to cash. As pain of payment reduces, spending propensity increases. Also, when using these mediums, people are more likely to underestimate or forget the amount spent on recent purchases; the lack of saliency for these mediums leads buyers to believe that they have more liquidity than they actually do, and this increases the purchasing probability of additional products (even non-essential ones).

Research also indicates that Read the rest of this entry »

Demonetisation – Government of India’s Measures to Promote Cashless Transactions

government-cashless-transactions The central Government of India has announced a slew of measures for systemic adoption of digital / plastic currency. The benefits accorded to digital transactions and benefits perceived by the government are as follows,

  • Discount of 0.75% on digital payments at central government petroleum PSUs – Will benefit 45mn customers at petrol pumps everyday. The incentive can shift 30% of customers to digital payments. Reduce cash requirement by Rs 2tn at petrol pumps every year.
  • No service tax on digital Read the rest of this entry »

Demonetization Effect – New Payment Platforms Grows

india-payment-platformsWith the boldest move in the History of India, The Demonetisation of Rs 500 and Rs 1,000, the nation continues to see a gradual shift towards newer payment platforms which should help India move towards a less cash economy. Higher tax compliance as well as lower costs have the potential to accelerate this change, especially post demonetization, but we would watch the pace of change for a few more quarters.

With 200,000 ATMs and 1.4 million POS machines, Indian banks seem to getting an unexpected benefit coming through demonetization as the bulk of 711 million debit cards and Read the rest of this entry »

Digital Payments in India eat into Banks POS Business

paytm-digital-payments-in-indiaThe Indian RBI has bucked the overall Economic Trends and given wide scope for Digital Payment Platform. In this backdrop it is very important to note that PayTM Digital Payment Platform [Wallet using Pre-Paid Cash or Money Added via Debit / Credit Card, has now acquired over 600,000 merchants (compared to 300,000 for SBI, the largest among bank acquirers) within 9 months of launch. PayTM is already conducting ~ 10mn transactions a month (plans to double it over the next few months) with these merchants, compared to Read the rest of this entry »

What Should be your Ideal Credit Utilization Ratio ?

india-credit-utilization-rateCredit Cards are basically instruments introduced to extend per-approved credit line for your spend. While using them one has to be careful about Credit Utilization Ratio and impact on Credit Score. Most of our readers posed me a question on how much Credit can one use on the per-approved credit line of Cards, Personal Loans, etc without affecting one’s credit scores.

Credit Utilization Ratio is the percentage of available credit limit that one is utilizing. For example on a Card with Read the rest of this entry »