New submitter mirandakatz
writes: Since India's prime minister banned 86 percent of the rupee notes in circulation last month, citizens have been waiting in hours-long lines for ATMs. But these circumstances have also created an unexpected progression: a burgeoning cashless economy. At Backchannel, Lauren Razavi explores how India is now beating many Western countries in adopting mobile payments, and how demonetization has triggered a radical shift toward reimagining India's enormous informal economy as a data-driven digital marketplace.
From the report: "Before last month, Paytm, a mobile app that allows users to pay for everything from pizza to utility bills, saw steady business -- it was processing between 2.5 and 3 million transactions a day
. Now, usage of the app has close to doubled. 6 million transactions a day is common; 5 million is considered a bad day. Rather than being forced to idle away time in excruciatingly long lines, 'people are proactively exploring other ways to settle payments besides cash,' says Deepak Abbot, senior vice president at Paytm. 'Now people are realizing they don't need to really line up, because merchants are starting to accept other forms of payment.' All of this has created a newfound system that practically incentives mobile payment. With so many people queuing up at banks every day -- and a lot of Indian bureaucracy to wade through in order to open a traditional bank account or line of credit -- the appeal of more convenient digital alternatives is easy to understand. According to a report
in the Hindu Business Line, as many as 233 million unbanked people in India are skipping plastic and moving straight to digital transactions. 'Cash has lost its credibility and payments are no longer perceived in the same way,' says Upasana Taku, the cofounder of Indian mobile wallet company MobiKwik, which reported a 40 percent increase in downloads and a 7,000 percent increase in bank transfers since demonetization
. 'There's chaos at the moment but also relief that India will now be an improved economy,' she says."