One Year of Demonetisation: Effects on Online Spending, Credit Card Usage and E-Wallets
Demonetization took away nearly 86 per cent of the currency in circulation, creating a huge cash crunch in the economy, forcing a digital economy push
India has witnessed a major growth in the e-commerce space, however the sector is still at its nascent stage and has a very huge potential for online spending.
The NDA-led Modi government shocked everyone with a sudden and surprising move on November 8, 2016 by taking high value notes of Rs 500 and Rs 1000 out of circulation sending the Indian economy in a tizzy.
Demonetization took away nearly 86 per cent of the currency in circulation, creating a huge cash crunch in the economy, forcing a digital economy push.
India has always been dependent on cash for almost 90 per cent of its transactions. As far as online shopping is concerned, nearly 80 per cent of the transactions were paid through Cash on Delivery (CoD) method. Post the demonetization announcement, CoD was majorly hit while e-commerce giants such as Amazon, Flipkart, and Snapdeal faced consequences with many shoppers cancelling cash orders immediately.
Cashkaro.com conducted a survey about the spending styles of the people and found out that 78 percent agreed that they have started to shop online more since demonetization and because of cash crunch. Going cashless has picked up and 35 percent people have started using ‘Plastic Money’ even while shopping at local vendors for daily needs and consumables.
Online shopping sites gained big time with demonetization and people prefer various sites for buying groceries and daily items. Amazon.in controls 25 percent market share, followed by BigBasket.com with 15 percent, Flipkart and Grofers.com with 7 percent each, and Snapdeal with 5 percent.
Paytm has gained the maximum and has become the leader of the preferred payment wallet with 50 percent user share. Freecharge ranks second with 35 percent followed by Mobikwik, Citrus Pay and Oxigen.
Cashback offers and coupons by banks and retailers have lured people into shop online. Payment through mobile wallet remains the preferred payment method used by 59 percent, net banking by 23 percent, Cash on Delivery (CoD) using Debit/Credit card – 18% and Cash on Delivery (CoD) via Cash with only 1 percent.