India’s bold decision to demonetize its paper currency 500 and 1000 rupee notes was ostensibly to fight corruption and the black economy, but it is also likely to have a profound impact on the telecoms industry.
As crowds gathered outside ATM machines around India amid chaotic scenes over the weekend an increasing number of Indians moved to the next alternative, cashless money.
Paytm, for example, announced it has now hit a record 5 million transactions a day, less than a week after the Government announced its decision.
Already, Paytm has been a big winner from demonetization and it is little wonder the company’s senior vice-president Nitin Misra has been hailing this as a “historic opportunity” for the country to leapfrog to mobile payments.
In the first hours after the announcement, Paytm says it experienced a 200% increase in mobile downloads and a 250% increase in overall transactions.
Similar results were seen at competitor MobiKwik, where downloads also doubled and the provider has begun adding 2000 users every day.
In proof that the company sees this as a major opportunity, it is offering 0% fees on money transfers as a way of acquiring customers.
Not only that, but MobiKwik has embarked on a mission to onboard 1 million new agents in the next 45 days.
Elsewhere in India, retailer Metro Cash & Carry is busily working on tie-ups with digital wallet companies as the whole payments system re-aligns around the new – mandated – cashless reality.
All this comes on top of spectacular growth in digital payments even before the Government announcement. Reserve Bank of India figures show that mobile transactions tripled in the second quarter of this year, compared to 2015.
So demonetization is simply accelerating a process which was already irresistible.
Clearly this has major implications for telecoms operators. The smartphone which is at the center of the whole industry is used for so many more things today that including the word “phone” is almost an anachronism.
It is the convergence of a growing menu of services and functions which a host of companies, from banks to utilities and retailers, want to be part of.
Paytm, of course, is a subsidiary of One97 Communications and was launched as a mobile commerce provider back in 2010.
It was a smart move by the company and one which other operators must be acutely aware of.
One97 grabbed an opportunity which is clearly part of the way forward, other operators were not so prescient.
The issue for other operators in Asia is to understand if they’ve left it all to late, and whether they can use payments or part of their transformation, or if payments operators are just going to take advantage of using their infrastructure.
It is happening all over Asia of course. In Singapore, United Overseas Bank is investing up to 60% of its strategic payments budget on mobile payments.
Visitors at the ITU Telecom World event in Bangkok this week may have noticed the proliferation of mobile payments in the Kingdom.
According to a survey released this week, around half the smartphone users in Thailand are already using some form of mobile payment.