MUMBAI: One month of demonetisation has brought about an unprecedented surge in business volume for startups connecting customers with vendors cashlessly via a mobile wallet or simply a payment gateway.
Since November 8, when the Central government demonetised Rs. 500 and Rs. 1,000 notes, Mumbai-based startup The Mobile Wallet has seen the number of merchant tie-ups double from 30,000 to 60,000 across India. Of this, around 14,500 are in the metropolisi.
The app for another city-based fintech startup, Benow, has been downloaded 1,000 times, and 30 merchants have come on board its pilot project in Powai. Freecharge, owned by Snapdeal, has seen a 12-fold jump in the number of transactions for food orders since November 8.
In the same period, mobile wallet player Paytm added 1.4 crore users while transactions have surged three times. When compared to the last six months, the number of downloads have increased 50 per cent, while transactions have doubled.
“More and more merchants are now ready to embrace digital payments,” says Vinay Kalantri, managing director, The Mobile Wallet, which was started just a year-and-a-half ago. “The biggest fight for digital transactions was against cash, and the demonetisation move by the government has made cash an inconvenient mode of transaction. We signed around 30,000 merchants in the last one month.”
Interestingly, provisional numbers released by the Reserve Bank of India on Thursday showed significant traction in prepaid payment instruments (PPI), which include mobile wallets. In November, 5.9 crore transactions were done for goods and services through PPI issued by eight non-bank issuers. The number of PPI transactions a day in December ranges between 25 lakh and 27 lakh, as per RBI data. Corresponding comparable numbers are not available for previous months. In September, PPI transactions totalled 7.53 crore, but that included mobile wallets, PPI cards and paper vouchers.
The surge in business for fintech startups has brought many small vendors into the fold, who were hitherto oblivious to cashless transactions. The Mobile Wallet, for instance, has signed up tea stall owners, paan vendors and kirana stores that dealt completely in over-the-counter cash payments.
Sudhakar Ram, CEO and co-founder, Benow, says the startup has been able to link many vegetable sellers and other local vendors in Powai to their customers in less than a month. “Demonetisation has set the right climate, and convincing merchants to try cashless modes has become much easier than we anticipated,” says Mr. Rao. “As part of our pilot project, we hope to have on board 50 merchants by this weekend. We have on board small vendors but large-format retail stores have also started to show interest.”
Also, by virtue of the kind of merchants signing up for digital transactions, the ticket size of many trades is less than Rs. 100.
