Demonetization of Higher Denomination Banknotes in India and Growth of Mobile Wallet Business Transactions

Abstract

This paper will discuss the effect of the recent denomination policy of the Government of India on the growth of mobile wallet business transactions. The impact is not going to be same across the different sectors of the economy. The business units that have a larger cash component in their transactions will be affected harder, such as reality, construction, movie production, etc. This will lead to some correction in these markets. Whether these corrections results in reducing prices is something to be watched closely. Demonetization of high value currency notes in India will provide a big boost for mobile wallet in India. Reduction in cash transactions will help multiply digital and plastic transactions such as cheques, credit card and mobile wallets.“Demonetization is the act of stripping a currency unit of its status as legal tender. It is the process of ceasing to produce and circulate particular forms of currency. It is necessary whenever there is a change of national currency. The old unit of currency is retired and replaced with a new currency unit.” [1]

Keywords: denomination, mobile wallets, online banking

[1] http://www.iasparliament.com/demonetisation