A recent shortage of cash in India’s ATMs has led to an uptick in digital payments, according to media reports from the region.
The government said at the time that the shortage was due to an unexpected surge in demand for cash. According to The Indian Express, bank officials have proposed a number of possible reasons behind the dry spell, from cash hoarding to deliberate removal of cash by the government.
As a result of the shortage, Indian PF Paytm told Quartz India that money transfers and QR code payments had significantly increased on its platform. Other payments companies, including PhonePe and ItzKash, reported unusually high transactions as well.
The Indian government’s demonetization policy, which unexpectedly removed much of the country’s cash from the system in November 2016, caused a boost in signups for digital payments companies such as Paytm.
That dramatic event, combined with other initiatives the Indian government undertook to push its citizens toward digital payments, appear to be affecting consumer behavior, at least initially. A report out last summer indicated that digital schemes – particularly those backed by the government – were signing large numbers of users.
But mixed results since then have demonstrated that habits don’t change overnight. While groundwork had been laid for a transition to electronic payments, a year after the event, many mobile wallet users had returned to using cash.
For its part, Paytm has continued to grow, recently announcing a relatively short-term goal of supporting 10 million merchants with QR code-based payments.