Talking Point: Demonetisation to witness spurt in non-bank players

“One of the immediate fallouts of the demonetisation of high value notes would be a mushrooming growth in the number of non-bank players like Paytm and Free charge into the payment business, as more and more retailers in the goods and service value chain would be compelled to shift to non-cash modes for customer transactions,” the Associated Chambers of Commerce and Industry of India (Assocham) said in a release here. 

The Assocham study found that while as many as 45 pre-paid payment instruments (PPI) players working as mobile and digital wallets have started offering services, it is only a handful of operators which have been aggressively ramping up and marketing their operations. 

“However, the demonetisation has come about as a big opportunity for them. It is not only during this immediate cash crisis period that the PPIs would see a huge growth, but going forward also, the system would penetrate into the very small ‘kirana’ stores as well,” said DS Rawat, Secretary General, Assocham. 

Offering stored value service to the customers, non-bank PPI issuers are allowed by the Reserve Bank of India (RBI) to make transactions for purchase of goods and services besides remitting payments out of the mobile wallets. 

“The wallet-to-wallet transactions would also see a big growth. It would not be a surprise if well-run road side ‘dhabas’ also start accepting bills through mobile wallet players,” Rawat said. “Given the thrust being given by the government to move towards the less-cash economy, the private sector PPIs is expected to invest lot more in product innovation and expand the reach through roping in both the customers and the merchants,” he added.