While India grapples with an acute shortage of physical currency, mobile wallet companies like Paytm and Mobikwik are looking at the government's demonetisation drive as manna from heaven.
While India grapples with an acute shortage of physical currency, mobile wallet companies like Paytm and Mobikwik are looking at the government's demonetisation drive as manna from heaven. CNBC-TV18's Prerna Baruah and Ronojoy Banerjee report that since the November 8, these companies have seen business jump exponentially and that's forced them to put their own expansion plans on warp-speed.
The likes of Paytm, Mobikwik, Freecharge and Udio have gone on a promotional overdrive and their business is booming. Paytm, which leads the e-wallet market in India, says it has hit a record 5 million transactions per day. "Right now adding 500000 plus consumers a day and earlier adding 40,000 merchants a day and now hoping to add 7,00,000 merchants a day," Paytm founder Vijay Shekhar Sharma said.
This surge in business has pushed Paytm to aggressively expand its network, add 700 sales representatives, and push its agent strength to 5,000.
Paytm's closest rival, Mobikwik, is much in the same boat. Agent base has jumped to more than 10,000 from the 1,000 agents it had before demonetisation. Transaction volumes have risen by a whopping 7,500 percent. The company has used this opportunity to even launch a lighter version of its mobile wallet to service people struggling with weak internet networks, especially in rural areas.
E-wallet companies hope that this sudden surge in usage and demand will help them achieve profitability quicker, but there are quite a few problems that still need ironing out, not least of which are poor smartphone penetration and patchy networks. The biggest worry is that people will go back to relying on cash transactions once the cash-crunch eases, and that will mean these companies having to go back to offering heavy discounts to bring customers back, and entice more partners.
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