On Nov. 08, India’s leading mobile wallet startup, Paytm, saw an unprecedented surge in new users.
The reason: On the same day, the Indian government decided to replace existing Rs500 and Rs1,000 currency notes. ATMs across the country will remain shut for the next two days so that the new currency notes can be injected into the system. This means citizens may necessarily have to go for non-cash transactions for some days, as cash may be hard to get.
Paytm allows users to make such transactions at 850,000 places across 1,200 Indian cities, including kirana stores, branded retail outlets, paan shops, and petrol pumps, among others.
So, while most Indians were left confused by the announcement, Paytm founder Vijay Shekhar Sharma could barely contain his happiness. The 38-year-old believes this is just the kind of push his company needed.
In an interaction with Quartz, Sharma called prime minister Narendra Modi’s decision “truly unprecedented” and said this would be the beginning of a big game for digital payment startups in the country.
What’s your first reaction to the government’s announcement?
It is truly unprecedented. The government had earlier launched voluntary disclosure schemes but this is the best and most effective way to ensure disclosure. Basically, now you either disclose the money you have stashed or all of it will just become useless paper.
This decision will help India leapfrog from black to white money and from a physical to a digital economy.
How are you so confident that this move will check corruption and black money?
A lot of black money is held in currency notes of higher denominations and, by removing them, there will be a massive check on corruption. The possibility of misusing cash is always higher than digital money because the latter can be traced. So, be it corruption or terrorism, it is cash that is used. And this move is a classic attack on such cash.
What about the frenzy that this decision will cause among common people over the next few days?
There is no doubt that there will be some pain over the next 10 days, but it is minuscule compared to the benefits of this step. I don’t think we should focus on the short-term frenzy. In the end, it will all be worth it.
How will this decision impact Paytm?
We saw a huge spike in new users after the decision was announced. I believe that our dream run is going to start now, and so we are preparing ourselves to put extraordinary efforts in the next few months to make sure that we are available in every nook and corner of India, which is a big task.
Why do you say that your dream run has started now?
This is the time when consumers and merchants will both look for alternatives to cash. And we can benefit a lot from that. This is exactly the kind of push we needed. We are looking at it as a perfect opportunity to push for the digital economy.
Does this change anything vis-a-vis your payments banks plans?
This decision makes things a lot more favourable for opening up of payments banks. For example, if we were operational today, our distribution network would have played a vital role in collecting and exchanging currency.
Actually, I wish we had started by now.