Most of the sectors of the economy are expected to take a temporary hit in sales due to the demonetisation move by the Government. There are some companies which seem to have benefitted from the cash crunch in the economy. The companies that provide services and platforms to perform transactions to pay or transfer money are suddenly witnessing rise in usage. Banks which provide customers with debit and credit cards are obviously witnessing rise in non-cash transactions but there are other companies other than banks which provide the platform for non-cash transactions.
The e-wallets like Paytm, PayU, MobiKwik, Vodafone M-pesa, Citrus Pay, Oxigen Wallet are used in non-cash payments where one transfers cash through net banking or debit card or credit card and can then pay for buying products. Paytm can be used to pay for auto-rickshaw rides, at local general stores, phone recharge, to pay electricity bills and even at smaller eat-out stalls. Mobikwik offers similar services. Paytm claims to have over 0.8 million partners including Big Bazaar, Mother Dairy, Thyrocare, Bharatgas, Domino’s, Pizza Hut, Croma and more. MobiKwik has partners such as Big Bazaar, Grofers, Big Basket, Lemontree, Makemytrip, IndiGo, Cleartrip, Yatraand many others. Any kind of online product purchase, booking tickets or payment of utility bills can be done with the help of these wallets.
Mobile payments and commerce platform Paytm reported seven million transactions worth Rs.1.2billion on 19th November 2016 because of wider cashless payments, after the government withdrew Rs500 and Rs1,000 currency notes. The digital wallet platform in one week has grown to become comparable to the combined average daily number of payment transactions seen by debit and credit cards in India.
As per the latest public data available on the website of Reserve Bank of India for August 2016, the total number of transactions at a point of sale through credit and debit cards is over 214 million, implying an average of over 6.9 million daily transactions.
A point of sale terminal (POS terminal) is an electronic device used to process card payments at retail locations. Point of sale terminals are a combination of software and hardware that allows retail locations to accept card payments without updating their cash registers to read cards directly. The costs of installing POS terminals vary with the size of the business and the terms from the supplier. Small merchants may have to pay rent for the terminal, as well as pay an additional per-transaction fee.
Small businesses across urban and semi-urban areas are busy requesting their banks to set up card-swipe machines or point-of-sale machines so that they do not lose business to their more tech-savvy rivals.
A payment bank is a differentiated bank that will undertake only certain restricted banking functions that the BankingRegulation Act of 1949 allows. These activities include acceptance of deposits, payments and remittance services, internet banking and function as business correspondent of other banks.
The Reserve Bank has granted in-principle approval to be a payment bank for the entities such as Aditya Birla Nuvo Ltd, Airtel M Commerce Services Ltd, Cholamandalam Distribution Services Ltd, Department of Posts, FinoPayTech Ltd, National Securities Depository Ltd, Reliance Industries Ltd, DilipShantilal Shanghvi, Vijay Shekhar Sharma, Tech Mahindra Ltd and Vodafone m-pesa Ltd.
This would mean that competition would be eventually heating up for noncash payment services in the time to come. Some of the big names such as paytm and mobikiwik are already gaining market share in these services and new entrants would have to offer better and innovative solutions to capture market share from them.
Companies indirectly or directly offering services to these companies who provide payment solutions in cashless form are there to gain in the near future due to the recent demonetisation move.
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