New Delhi: More than 40% of the users who had started using mobile wallets post demonetisation have shifted back to cash, said a research report.
A study on the usage pattern of mobile wallets conducted by Chrome Data Analytics & Media, found that around 40% out of the 65% active users for mobile wallets have shifted to cash transaction with an increase in the availability of cash in hand.
“Demonetisation took away nearly 86% of the currency in circulation, creating a huge cash crunch in the economy, forcing a digital economy push. However as we near the year-long anniversary of demonetisation, cash has once again started gaining momentum. The usage of e-wallets has decreased drastically," said Pankaj Krishna, chief executive officer and founder of Chrome Data Analytics & Media. “However, people continue to use e-wallets for electricity charges, payments of online food chains and cab-hailing services due to the convenience it offers."
The findings of the report is based on data collected from 2,672 respondents across eight metro cities in the months of November-December last year (during demonetisation) and during August-September (after remonetisation) to capture the change in usage pattern of mobile wallets.
Out of the 2,672 respondents, 23% of the respondents use mobile wallets for payment of bills such as electricity and phone recharges and around 22% of respondents use it for online food ordering. The growing popularity of cab-hailing apps has given an impetus to its usage as around 15% of the respondents use these wallets to pay for their cab rides, claims the report.
The report highlights that the usage of mobile wallets has fallen despite cash backs and discounts being offered by these companies to sustain the business.
According to provisional data released by the Reserve bank of India(RBI), the usage of prepaid payment instruments (PPIs) such as mobile wallets hit a new record in terms of the value of transactions. Transactions worth Rs2,759 crore were recorded in September against Rs2,722 crore in the previous month. However, the volume of PPI transactions fell marginally by 2.5% to 87.5 million in September from 89.7 million in August. The provisional data considers transactions of PPI issued by eight non-bank issuers for goods and services transactions only.
“The wallet, in its existing model, might face challenges standing up to banks and Unified Payments Interface (UPI) especially in a country like India where having a bank account is necessary for one to operate a digital wallet. E-wallets are gearing up to face the challenges by providing multiple banking services to its existing user base," added Krishna.
UPI is a payments system launched by National Payments Corp. of India (NPCI) that facilitates instant fund transfer between two bank accounts on a mobile platform, without requiring any details of the beneficiary’s bank account.
Around 77 million UPI based transactions were recorded in October, an all-time high. In the last one year, UPI transaction volume has risen more than 700 times, figures released by National Payments Corp. of India (NPCI) showed.
The first anniversary of demonetisation of high-value currency notes comes up later this week on 8 November.