An immediate fallout of the demonetization of high value notes would be a mushrooming growth of non-bank entities like Paytm and Freecharge into the payment business, industry chamber Assocham said on Sunday citing a study.
“One immediate fallout of the demonetization of high value notes would be a mushrooming growth in the number of non-bank players like Paytm and Freecharge into the payment business, as more and more retailers in the goods and service value chain would be compelled to shift to non-cash modes for customer transactions,” the Associated Chambers of Commerce and Industry of India (Assocham) said in a release.
The Assocham study found that while as many as 45 pre-paid payment instruments (PPI) players working as mobile and digital wallets have started offering services, it is only a handful of operators which have been aggressively ramping up and marketing their operations.
“However, the demonetization has come about as a big opportunity for them. It is not only during this immediate cash crisis period that the PPIs would see a huge growth, but going forward also, the system would penetrate into the very small kirana stores as well,” Assocham Secretary General D.S. Rawat said.
Offering stored value service to the customers, non-bank PPI issuers are allowed by the Reserve Bank of India (RBI) to make transactions for purchase of goods and services besides remitting payments out of the mobile wallets.
“The wallet-to-wallet transactions would also see a big growth. It would not be a surprise if well-run road side dhabas also start accepting bills through mobile wallet players,” Rawat said.
“Given the thrust being given by the Government to move towards the less-cash economy, the private sector PPIs is expected to invest lot more in product innovation and expand the reach through roping in both the customers and the merchants,” he added.
Besides PPIs, other electronic transactions and services devices would be offered aggressively even by the banks, who are presently bearing the brunt of cash swapping, the chamber said.
According to RBI data, currently as many as 67 banks are offering mobile services to 120 million customers.