The new currency notes. This changes everything for ecommerce and wallets?

Where is the cash for CoD?

So yeah, the government has announced this bold decision to invalidate Rs. 500 and Rs. 1000 note currency as a major assault on black money, fake currency and corruption.

rs-2000-notes

How does this impact the startup / digital space? We don’t know the answer, but here are a few questions:

1. Will this impact ecommerce very badly ?

It’s quite a known phenomena that CoD has been one of the major driving force behind ecommerce transactions.

And within CoD, tier-2 and tier-3 population were among the top users – precisely because it also provided an easy way to use the black money (FYI: this has been very true for most of the fashion and jewellery products).

As per reports by KPMG and others, It is estimated that by 2018, around $8 billion will be handled in cash by the Indian ecommerce industry.

Will we see a dip in ecommerce transactions ? Primarily because CoD buyers from tier-2 and tier 3 towns aren’t going to use the *black money* cash?

FYI : India Post clocked Rs 1000 Cr in revenue just from ECommerce CODs (driven by tier- 2 cities).

2. Rise of wallets?

Somewhere in Paytm (and other wallet business), here is what is probably happening

But the question here is will RBI work on startup friendly wallet policy? Is this a one-way street? Will RBI actually make digital transactions simpler and hassle free? (for instance, OTP-less for smaller transactions)?

For sure, this is a game changer – but let’s hope this is the beginning of a new chapter and NOT an end.

What’s your take? How does this impact ecommerce and digital payment space?

[image credit]

This post was created with our nice and easy submission form. Create your post!

3 Replies

  1. The “cash” in CoD is not going anywhere. It’s just that currency notes are changing.

    Sure – it will be chaotic. Indeed – it’s a move to curb the parallel economy.

    Will it reduce online shopping – may be a little bit, and that too only until the new notes get into circulation.

    Will it encourage more digital / online / paperless transactions – yes, for the most part.

    So is this a problem for startups? For a while. But is there a dearth of problems for a startup? Hell no!

    The “chor – police” will continue for a while, but getting these currency notes out of the system is a smart move indeed!

  2. Not all ill gotten money is in currency. A very large proportion is invested in real estate and bullion. How to unearth that?

  3. I also heard startups have this in mind that many people who buy COD have black money.It is good that it will get stopped for sometime.But the question is won’t there be any black money after Dec 30?Will there be no corruption?I think government should ban currency notes all together and work on a framework where all class of people can transact virtually.