‘E-wallet usage slips as cash returns’

Cashing in: Most e-wallet companies have added a significant number of consumers post demonetisation. — FILE PHOTO: AP   | Photo Credit: AP

With cash coming back into the system, the use of e-wallets fell by about 50% in the first two months of 2017, according to a study.

The study on the impact on usage of e-wallets post-demonetisation conducted by Brickworks Media, powered by Chrome Data Analytics & Media, found that 31.8% of respondents used digital wallets in January and February (2017) as compared with 64.7% using it in November and December (2016), a drop of 49.14%.

“Post the demonetisation drive, as cash flow returns to normal, people have access to cash, resulting in a drop of nearly 50% in e-wallet payments,” Pankaj Krishna, Founder and CEO, Brickworks Media said. “The daily frequency of usage for e-wallet payments has decreased by 4 times post demonetisation.”

‘Viable alternative’

Mr. Krishna added that Indian consumers still prefer other modes of payments such as cash or debit/credit cards over e-wallet payments. However, there are a few categories like travel, local food joints, online purchases and payments at petrol pumps where e-wallets are still popular.

“Having said that, given infra around e-wallets will increase due to the digital push by the government; e-wallets should become a viable alternative for payments in the future,” Mr. Krishna said.

The survey was conducted among 13,611 respondents, across eight metro cities that include Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad and Pune.

About 68% of the respondents were in the age group of 15-30 years.

The Prime Minister, on November 8, in his address to the nation had announced demonetisation of ₹500 and ₹1,000, while introducing new ₹2,000 notes.

The announcement rendered ₹500 and ₹1,000 notes, which accounted for 86% of the cash in circulation in the country, invalid, resulting in a severe cash crunch.

To deal with the shortage of cash and also in response to a push from the government to move towards a less cash economy, a lot of users had switched to using e-wallets.

All major wallet players, including Paytm, MobiKwik and Freecharge saw a surge in users. According to RBI data, in November 2016 number of m-wallet transactions stood at 138.09 million (and ₹33.05 billion in value) and in December the number jumped to 213.11 million (and ₹74.48 billion in value).

The survey pointed out that the number of daily users of e-wallets has declined to 9.2% from 39.8%, while those using it once in 2-3 days fell to 12.3% from over 42%. The number of people using e-wallets once a week increased to 42% from 13% earlier.

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Printable version | Jan 19, 2022 8:20:19 AM |

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