E-commerce leaders welcome government’s currency demonetisation

CEOs and IT leaders in e-commerce welcome the government’s decision of withdrawing Rs.500 and Rs.1000 notes hoping that it will pave way for more digital transaction.

By Akshaya Asokan
Nov. 15, 2016

E-commerce leaders welcome government’s currency demonetization

The e-commerce sector has welcomed the government's move to withdraw Rs. 500 and Rs. 1000 bills from the market in a bid to curb the parallel economy.

We spoke to some of the e-commerce IT leaders about what these players think about government's move and how it would affect their daily cash transactions. "The announcement by the government is a watershed moment in the history of India. The best part is that the governance will kick in as corruption will be eradicated. That said, it will also lead to overall growth of the e-commerce sector as well as offline stores, increasing the GDP, says Gyanesh Kumar Sharma, CTO, Shopclues.

Highlighting the impact on cash on delivery (CoD) model, Sharma says that, with this move, the CoD percentage will go down for a week, but the operational metrics of all the companies will improve, as the overall logistics cost will reduce. Interestingly, people will become habituated to pay online, so it will be a watershed moment for the online retail payments world.

We tried to understand the technical roadblocks faced by his firm. He says, "We are not worried about technology or load on our servers as even during Diwali, we handled multiple transactions. However, payment companies like Paytm need to scale up their technology, as they could witness a 10x growth in transactions."

Describing the government's decision as a bold and much needed move, Ananth Narayanan, CEO, Myntra, said, "This will fundamentally change the way an Indian consumer transacts and will enable e-commerce companies to grow their non-cash payment channels faster which will give impetus to the growth of digital commerce."  As consumers come to term with the change, he points out that there will be a short-term impact on the e-commerce transaction but adds that there wouldn't be any material change in spending," There is a leaning towards CoD as a preferred mode of payment, but in the longer term we don't foresee any material change in consumer spending," he said.

"We will be taking all measures to ensure non-cash payment channels continue to be completely seamless for our customers. "We are taking all steps to guide our customers to a smoother transition towards non cash transactions and make this initiative a success," Naryanan said.

Myntra's parent company Flipkart, like others, has stopped accepting notes of Rs. 500 and Rs. 1000 denomination as CoD option.

Flipkart in a statement has urged its customers to look into alternative sources of payment mode. "In order to enable customers to conserve smaller denomination notes for daily essential use, we are restricting CoD on orders below Rs.1000. Meanwhile, we urge our customers to opt for alternative payment modes such as card on delivery, internet banking, credit and debit cards, gift cards, and our easy and convenient PhonePe wallet," said a company spokesperson.

"This is a step towards digital India as there is trust and transparency on the system, "concludes Sharma.

Source: CIO India