Following Prime Minister Narendra Modi announcement of the demonetization of Rs 500 and Rs 1000 currency notes, most e-commerce sites have stopped opting of Cash on Delivery (CoD) as the preferred payment option. With notes going out of circulation, people can use credit/debit cards, net banking or gift cards to purchase their products. This results the customers to save cash for necessity and chose to pay through online mode.
“Today is digital India's luckiest day and start of golden age for all FinTech companies. Privileged to be born in this time and age!” said Vijay Shekhar Sharma, Founder, Paytm.
Move towards Cashless Economy
Flipkart, largest Indian eCommerce website welcomed this bold and historic initiative by the Government of India. This will enable India to move faster towards digital payments and will be a game changer for Flipkart and for the eCommerce industry.
“We are no longer accepting Cash-on-Delivery (CoD) payments in Rs. 500 and Rs. 1000 currency notes. In order to enable customers to conserve smaller denomination notes for daily essential use, we are restricting CoD on orders below Rs. 1000,” said Flipkart Spokesperson.
They have urge their customers to opt for alternative payment modes such as card on delivery, internet banking, credit and debit cards, gift cards, and our easy and convenient PhonePe wallet. Further, they are also working on a slew of measures to help customers easily transition from cash to digital payments.
Commenting on the same, Kunal Bahl, CEO, Snapdeal said, “We welcome the Government’s bold and courageous move to weed black money, which will have significant long term benefits for the economy. With this, the quantum of India’s economy moving through the digital pipes will witness massive growth. Both Snapdeal and Freecharge are committed in supporting all such initiatives.”
“The informal or parallel economy share is expected to come down in the next few years. This will prompt more innovation in the nascent electronic payment industry. This reiterates that opportunities in India for developing electronic payment methods for sellers are unprecedented amongst all emerging markets. Without doubt, this will bring down frauds and thefts and costs of printing cash. Overall, if executed well, the costs of doing transactions between buyers and sellers will lower significantly by 2019”, shared Sirish Kumar, Founder and CEO, Telr.
Allso, Not only this will contribute to reduce inflation due to excess liquidity in the market, but will also put our economy on a long-term path of cash-less transactions. On the retail front, we are not affected by this move as our transactions do not involve cash money transfers. Being a respectable and honesty-driven brand, our trade partners also do not indulge in cash transactions. From the consumer point of view, in the first few days, there will be some slowdown in sales as the consumers get to terms with this sudden dramatic development, but things will return to normalcy very soon. Our products are home utility products which the consumer needs daily; they will stop buying these products, though they can push off their buying ahead by a few days", said Umang Srivastava, Joint Managing Director, Bonita India.
Dhruvil Shanghvi, CEO & Co-founder, LogiNext "Cashless transaction is the catalyst which can pave the way for a comprehensive digital India campaign to become a success. Narrowing down to the logistics industry, it is high time that small and large vendors skip the dependency on cash transactions which have always hampered the proficiency of operations. This demonetization move will push the industry towards accepting the digital revolution voluntarily or involuntarily and we could expect a large wave of digital transformation in the Indian logistics space."
This will definitely bring about a sea of changes in the way transactions are done in India. This will help strengthen the economy by wiping out black money and fake notes. While e-comm companies that see a huge chunk of payments happening through Cash on Delivery mode will face some challenges in the initial few days, in the long run this move will only bring about positive changes.
“We welcome the government’s decision to discontinue Rs. 500 and Rs. 1000 currency notes, and introduce new notes in the market. It is a bold move from a cash economy to a digital-first one. We anticipate it will have long-term benefits for the economy, ushering in transparency and a faster adoption of digital payments, something that the Honorable Prime Minister Shri Modi has called for. Uber and other tech companies in India and around the world depend on consumers being able to frequently make low value payments with minimal friction. We encourage the government to adopt practical measures that can make digital transactions more convenient and seamless”, stated Amit Jain, CEO, Uber India.
Use of cards & Wallets
The curbs on the use of high value denomination notes in the short-term will accelerate adoption of e-commerce websites and digital payment options such as wallets, credit and debit cards. On the same lines, “I predict a paradigm shift in the minds of the Indian customers as insecurities around online payments will reduce significantly", said Piyush Jain, Founder and CEO, Impact Guru.
Karan Tanna, Founder & CEO, Yellow Tie Hospitality Management said, "The F&B industry will not have any major implications due to the recent move of demonetization. The move is expected to bring about a positive change for the nation. In an era where digitization is on the rise, payment modes have also gone digital. With increased digital options for payments the F&B industry including franchisee restaurants will experience streamlining of processes and finances."
“As an immediate and short-term effect there will be a shortage and scarcity of the said denomination of currency, this is bound to affect the COD (cash on delivery) mode of payment of e-commerce companies. On the contrary, the move is set to have a positive impact on the country’s economy in the longer run. The move will also trigger increased use of digital payment modes which would help in achieving the goal of Digital India", said Manu Agarwal - CEO & founder, Naaptol.
There is an expectation in an immediate impact of drop in consumption because of ban on Rs 500 & Rs 1000 note. “Statistically 60%+ of our sales happens in cash and out of it 80%+ in Rs 500 & Rs 1000 denomination note. So there’s direct impact of our approx. 50% receivable currency. The situation will remain grave for next couple of months till the time enough money is circulated in the system. Till that time customers will conserve every single penny and will result in sales loss. However, once things are streamlined, we are reasonably sure that positive momentum will be built and pent up demand will take care of interim losses”, Sharad Venkta, CEO & MD Toonz Retail India, Pvt. Ltd.
On the similar lines, Amit Daga, Founder & MD, Deal Kya Hai? said, "This is a welcome move and the beauty of it is that only cash flow will be hampered, but the electronic currency will be in circulation. Offline retailers who may not have card swipe machines at their point of sales may risk losing business, but for next few days our delivery boys will be accepting payments from portable card swipe machines for cash on delivery orders, ensuring hassle free shopping & customer delight."
Impact on different sectors- Real estate, Car Industry & Fashion
The banning of higher currency notes is a major move, which will help curb unaccounted-for cash in the real estate sector. “We have just witnessed a tremendous step towards increased transparency in the Indian real estate industry. The effects will be far-reaching and immediate and will shake the sector in no uncertain way. Stricter measures against black money have for long been required to help bring about greater transparency, give the Indian real estate sector more credibility and make it more attractive for foreign investors. Black money deals are more common in the unorganized market, but this practice has, in fact, been on the decrease with greater awareness on the part of buyers. Before too long, the caricatured version of black money driving Indian real estate is no longer applicable”, pointed Anuj Puri, Chairman & Country Head, JLL India.
On the other hand, the used car industry is set to experience a positive turn around by the currency withdrawal move. “Considering the current state of the industry- being unorganized, the move will help to curb a lot of unaccounted cash transactions. It will help organized players like us to gain traction, both the stakeholders - consumers (buyer & seller) and organizations, will experience transparency in transactions. We at Truebil we would like to congratulate PM Narendra Modi on the bold move to create a better and digital driven India”, said Shubh Bansal, Co-founder & Chief of Marketing, Truebil.
Similarly, for fashion industry, the impact will on low-budget projects like portfolio, shoots and fashion blog commercial. Therefore, fashion vendors or suppliers who majorly work on cash transactions will now have to explore other mediums such as cheques or bank transfers and digital wallets. “Emerging designers whose customers generally pay them in cash may have to face the inconvenience and find an alternative route. However we feel, the impact is temporary and in the end it will help bring technology to support the fashion ecosystem", pointed Amit Bhardwaj, Co-founder & COO , 6Degree a leading Fashion-tech startup.