How Indian Entrepreneurs Are Expected to Seize Post Demonetization Business Opportunities This ongoing transformation is providing ample opportunities for startups to enter the new era of a digital economy.
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In a surprising announcement, Indian PM Narendra Modi on 8 November 2016 demonetized the high-value currency notes of Rs 500 & Rs 1000. Among the reasons justifying the demonetization move were curbing black money, fighting corruption and destroying the parallel shadow market. Ordinarily, India is amongst the top cash-intensive economies, wherein the high currency notes accounted for about 86% of cash in circulation. Demonetizing such a huge portion of circulating cash has led to increased liquidity in the economy, hurting the industrial sectors with a sizeable magnitude of cash transactions. Consequently, the online market has also taken a blow due to depleted conversion rate optimization practices in a big way.
Although, many Indian startups in versatile niches are facing a huge problem due to an elevated cash crunch, the majority of entrepreneurs hailed the government decision. According to them, the move is supposed to indirectly support and strengthen the emerging digital payments market in the country. India is gradually transitioning from less cash society to a cashless society. This ongoing transformation is providing ample opportunities for startups to enter the new era of a digital economy. Undoubtedly, the tremendous growth opportunities lying in the digital payment sector are available to be beckoned by the new breed of Indian startup entrepreneurs.
Related: The Party For Digital Payment Wallets' Companies Has Begun Early, Thanks to Modi!
Digital Payments – The Key to Combat Cash Crunch Due to Demonetization
Owing to the increased smartphone usage, greater internet penetration rate and economic digitization, the urban population was already in favor of online transactions. Nevertheless, post demonetization, Mobile wallet apps have recorded a massive rise in downloads. If the pace to embrace the digital economy continues in India, supposedly, by the end of 2018, the market share of Mobile wallets in India will grow at CAGR of 140%. Conversely, the global mobile wallet market will not rise beyond CAGR of 34% by the end of 2020.
As per the new study conducted by Google (Alphabet Inc.) and Boston Consulting Group, India is headed to record an exponential growth in digital payments arena over the next four years. India, the third largest economy in Asia is expected to grow ten times reaching $500 billion by the end of 2020. Accordingly, the report also says that the digital payment industry will contribute to about 15% of the GDP.
If half of Indian internet users will be favouring digital payments, and if 70% of the GMV (Gross Merchandise Value) is expected to be driven by 100 million users, it clearly indicates the huge opportunities lying beneath adoption of digital transactions. The trend of going cashless will benefit a plethora of startups in the digital economy. Until now, online shopping,movie tickets and utility bill payments were the top three services preferred for digital transactions. From now, mobile wallets and use of debit/credit card will also emerge as a preferred mode of transaction.
After demonetization, there has been a forced upsurge in the use of mobile wallets. Certain mobile wallet service offering companies like MobiKwik, Freecharge, and PayTm started encouraging people hit by the demonetization to use their services. In the meantime, they worked harder to increase their points of sales, encompassing retail grocery stores, cafes, petrol stations, restaurants and much more in the online as well as the offline world. Consequently, the offline point of sales is expected to contribute about 60% of the digital economy in India. The push of digital transactions will benefit many startups in one or the other way. It is up to the new breed of entrepreneurs to decide on accepting, introducing and innovating the best possible way to lead their business towards a digital economy.
It is Your Turn to take hold of the Prevailing Opportunities Post Demonetization
With the current demonetization move in India, there is no shortage of the hype around the gambit of potential in digital payment. With a push towards a cashless economy, India has become a mobile enabled environment, providing numerous opportunities to the players diving in this ecosystem. For online and offline business taking the heat of cash crunch, mobile wallets have shown the underlying opportunities having enough potential to boost revenues and reduce operational costs.
Globally, mobile wallets are looked upon as a medium for efficiently moving more consumers through the line for driving revenue. By leveraging mobile wallets, a merchant gets directly connected with his/her customer, resulting in more sales of goods and services during the economic crunch. Undoubtedly, the mobile environment plays an important role in improvising the customer experience, thereby enhancing the brand value and brand proposition of the business. Thus, payments become a mere end of the sentence, whilst the focus is to offer customer-centric shopping experience and remain competitive even in the changing business landscape.
When a retailer, consumer or a consumer brand enters the consumer's mobile environment, it is exposed to a significant number of opportunities. Entrepreneurs need to think about catering to the increasing anywhere, anytime consumer base. The rich interactive experience offered by the modern mobile payments dominated world results in empowering numerous connections in this environment for the first time. It will result in driving a highly personalised real-world experience. This makes it imperative for modern businesses to align a mobile strategy for businesses across different verticals.
More than before, it has become imperative for the modern businesses, (online/offline) to have a strong mobile strategy. A strategy meeting growing demands of the new hyper-connected consumer base, expecting brands to sell their products and services with a personalised touch. An effective and robust mobile strategy is supposed to bring fruitful outcomes for both in-store and internet-based purchases. Entrepreneurs badly hit by the demonetization or on the verge of quitting must consider either to build a mobile/web app or deploying the third-party mobile wallet coping with the business specific goals.
Secure login, ease of use, convenient transaction and easy access are sublime features of the mobile wallets. Mobile wallet companies in India are poised to change the way India transacts by introducing few advanced features in the next few months. Undoubtedly, mobile wallets are expected to add value to the Indian economy. Nevertheless, "with the good comes the ugly', with increased use of digital transactions, increased cybersecurity risks should never be overlooked.
Increased Use of Mobile Wallets Will Increase Cyber Security Risks
"Within the good comes out the BAD". After the demonetization move, India has witnessed a subsequent rise in the digital transactions, which is supposed to continue in future. This leap of Indian economy towards a cashless society gives rise to the challenge of ensuring safety, security, and confidentiality of transactions. Entrepreneurs using mobile wallets and companies offering optional transaction mediums must never compromise the security of users or of an enterprise,guaranteeing the smooth running of an organisation. Being a user thyself, entrepreneurs can play an important role in identifying the loopholes and threats in the usage of current mobile wallets.
Consumer's carelessness is always out of the picture, but it is the duty of entrepreneurs to take the cyber threats seriously. After you start using a mobile wallet or any such service for the digital transaction, the financial well-being and reputation of your business are in the hands of a tech person working for you. Remember, henceforth "Cybersecurity is not a matter of choice but of responsibility". If you are planning to go miles after embracing digital payment, you need to be cyber safe and alert. You must understand the vulnerabilities in your mobile strategy and in the digital payment methods, patch them before a cyber threat uses it adversely.
Conclusion
The affordable 4G phones have fueled the Indian transformation towards a cashless economy. The telecom service providers adding a spectrum resource to their service adds the impetus. The cashless transactions post demonetizations offer a room for countless unicorns in the space. However, before jumping into the wave of the cashless economy, many issues need to be addressed by an entrepreneur, including the cyber security threats. As the cashless transaction continues to present a compelling movement in the evolution of mobile payment; never than before, this is the right time to embrace mobile wallets or digital transactions and grow your business.
