There may be a winner that emerges from the snafus and snarls caused by the demonetization of Indian notes that have effectively paralyzed parts of the economy: cashless payments.
As has been widely reported, the ban on 500- and 1,000-rupee Indian notes, which took effect last month, removed a huge chunk of currency from physical circulation, with some estimates as high as 86 percent. The sudden, mandated absence of these higher-denomination notes, along with all sorts of delays in getting new notes to where they needed, ad need to be — into the hands of citizens and even at banks themselves — has prompted a fresh look and usage of the nation’s cashless initiative, which Bloomberg noted “has struggled to gain traction.”
Data points back up the contention that cashless payments are indeed getting a new look and some adoption in India. The nation’s central bank has estimated that the Unified Payments Interface (UPI) saw 358,000 transactions in just the first nine days of the month — outstripping the 287,000 transactions seen in the entire month of November. Mobile payments across this platform went live only at the end of this past summer. Transactions across the UPI have ranged from peer-to-peer payments to bill payments. The total number of registered users in the most recent data analysis stood at 2 million individuals, Bloomberg said. Yet the target is a considerable one: as many as 25 million users by March 2017.
And against the cash crunch set in motion by the removal of physical Indian notes from circulation last month, a government committee is encouraging greater acceptance of UPI across merchants.