500 and 1000 demonetized banknotes: why the movement is unlikely to push digital payments

On Tuesday evening, Prime Minister Narendra Modi made an unexpected announcement where he said that the Rs. 500 and Rs. 1,000 banknotes in circulation are dropped as legal tender. This is news that caught many off guard and immediately fueled speculation that it will push people towards more digital transactions, with people preferring to use virtual wallets and other digital payment methods, rather than carry wallets full of rupees. 100 tickets.

This excitement around the digital economy might have been premature, as Prime Minister Narendra Modi was quick to announce that the new Rs. 500 notes are going to be issued, and a brand new denomination of Rs. 2,000 will also soon be in circulation.

Vijay Shekhar Sharma, Founder of Paytm tweeted that this was a surgical strike in favor of digital money, a sentiment share by MobiKwik founder Bipin Preet Singh, but it’s hard to see why you say that. With high denomination banknotes returning to replace rupees. 500 and Rs. 1000 notes, on paper, it looks like you are exchanging one set of paper money for another. The move is great if you want to take out the black money that’s already in circulation, but it’s pretty inconvenient for everyone, and hardly a big boost against the silver if you’re going to introduce higher denominations.

Over the next few days, your cash on delivery orders are going to be extremely annoying as those Rs. 500 and Rs. 1000 notes will be useless – that’s pretty safe to say. ATMs will be closed on the 9th and some will be closed on the 10th as well, so if you don’t have any rupees. 100 tickets stored right now is going to be a problem. If you have an e-commerce order scheduled for your cash on delivery, reschedule it if you can and it will save you hassle later.

As Prime Minister Narendra Modi said, you can redeem the Rs. 500 and Rs. 1000 notes in banks in the near future, so this “problem” is not expected to last very long. Overall, the move looks like a black money reset, not a fix, and it doesn’t appear to have anything to do with the digital economy, for better or worse. .

Amit Somani, Managing Partner at Prime Ventures Partners, tweeted that money is dead. Honestly, from now on it looks like cash is getting a new look.

Is Rs. 500 rupees. The demonetization of 1000 bills diverts Indians from cash? We discuss it on Orbital: The Gadgets 360 Podcast. You can either subscribe via iTunes or RSS or just hit the play button below.

Disclosure: Paytm’s parent company, One97, is an investor in Gadgets 360.