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In a decisive and swift move, the Government of India demonetised the INR 500 and INR 1,000 denomination currency notes in circulation effective the midnight of 8th November 2016.
This move is of significant importance to NeoGrowth, as we strongly believe in the evolution of digital economy as a prime contributor to a sustained growth cycle. This has been evident vis a vis the positive impact that these initial days of demonetisation have shown on NeoGrowth ‘s business.
Speaking on this development, our MD, Mr. PK Khaitan said “Consumer Payments in India are extremely cash dependent, and only 10% or less are digital, this will change, as more and more consumer facing businesses will start accepting digital payments and the share of digital to cash sales in these businesses will continue to tilt in favour of digital. We are excited about this development, and will continue to monitor closely, both from a tactical and strategic level”.
This is further exemplified by the BCG and Google forecast on digital payments in India reaching $ 500 Bn. in 2020 from a Visa/MasterCard spend of $ 65 Bn. in FY 2015-16.
Bill Gates in his recent tour of India shared some insights into this digital revolution “India is pushing towards digitisation in a big way. The scale of the country means that once India gets there, the amount of digital innovation here will be greater than anywhere else in the world,” Gates said.
This demonetisation drive has also paved way for a new mind set amongst Indian consumers as well as merchants towards adapting digital mediums for their day to day transactions. The move from a cash inclined business environment to a digital environment will be slow but decisive.
More and more digital payment systems will emerge and co-exist. Right now, Visa and MasterCard are the pre-dominant payment systems for digital payments in NeoGrowth’s constituency, but recent times have also seen the emergence of Rupay. In addition to this, mobile wallets (Paytm, Mobiquick, Oxygen), Payment Banks (Vodafone, Airtel etc.) and Aadhar based payments via the UPI will all expand the size of the addressable opportunity for NeoGrowth in the days to come.
“Getting banks to deploy PoS terminals in proportion to bank accounts managed by them, enabling all PoS terminals to be Aadhar compliant, linking more and more APIs and digital data sources (India Stack, Credit Bureaus etc.), providing licenses to Payment Banks and Small Banks, and particularly to some of the Telcos and Wallet providers who have several hundred million subscribers already “, are some key measures which can be undertaken to further boost the digitisation efforts in the Indian economy, suggested Mr. PK Khaitan. Digital evolution has gripped the nation and is sure to have far reaching positive effects in the days to come.
