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Little do people know that ๐๐ง๐๐ข๐ has silently built the best ๐๐ข๐ ๐ข๐ญ๐๐ฅ ๐ฉ๐๐ฒ๐ฆ๐๐ง๐ญ๐ฌ infrastructure in the world.
While most of the world is still using credit cards and cash, India has ๐ฅ๐๐๐ฉ-๐๐ซ๐จ๐ ๐ ๐๐ into the future.
Here is how it all started...
While most of the world is still using credit cards and cash, India has ๐ฅ๐๐๐ฉ-๐๐ซ๐จ๐ ๐ ๐๐ into the future.
Here is how it all started...
India has had a long history of ๐๐จ๐ซ๐ซ๐ฎ๐ฉ๐ญ๐ข๐จ๐ง and ๐๐ฅ๐๐๐ค ๐ฆ๐จ๐ง๐๐ฒ.
Examples of black money include money obtained through selling illegal goods (e.g. drugs) and activities (e.g. human trafficking, funding terrorism)... you get the point.
Examples of black money include money obtained through selling illegal goods (e.g. drugs) and activities (e.g. human trafficking, funding terrorism)... you get the point.
Obviously, this is not conducive to economic growth and prosperity, and is especially not conducive to collecting taxes ;)
Therefore, curtailing this shadow economy became a priority for the Indian government starting in the last 90s and early 2000s with the ๐๐ซ๐๐ฏ๐๐ง๐ญ๐ข๐จ๐ง ๐จ๐ ๐๐จ๐ง๐๐ฒ ๐๐๐ฎ๐ง๐๐๐ซ๐ข๐ง๐ ๐๐๐ญ.
That was a good first step, but not enough to extinguish the shadow economy.
That was a good first step, but not enough to extinguish the shadow economy.
In November 2016, the government of India took sweeping measures to combat the shadow economy. They ๐๐๐ฆ๐จ๐ง๐๐ญ๐ข๐ณ๐๐ ALL โน500 and โน1,000 banknotes.
Indians were given 50 days trade in their old demonitized notes for the freshly printed โน2,000 notes.
Next thing we knew, there were long lines at banks and ATMs as people scurried to trade in their hard-earned money. It got so bad that some people even died in the process.
Next thing we knew, there were long lines at banks and ATMs as people scurried to trade in their hard-earned money. It got so bad that some people even died in the process.
The government predicted that ๐๐% of the demonitized notes would be removed from circulation. It turned out that they were VERY wrong.
After all is said and done, ๐๐.๐% of all the demonetised banknotes were deposited with banks and only 0.7% was not.
Why?
After all is said and done, ๐๐.๐% of all the demonetised banknotes were deposited with banks and only 0.7% was not.
Why?
Because black money holders keep 6% or less of their wealth in cash. Most of it is held in the form of real estate, bullion, and jewelry.
So targeting cash was not a successful strategy.
So targeting cash was not a successful strategy.
Something interesting was also happening in parallel to the 2016 demonitization.
About 6 months before the demonetization, there was the launch of something revolutionary called โ๐๐๐โ by the Indian government.
About 6 months before the demonetization, there was the launch of something revolutionary called โ๐๐๐โ by the Indian government.
UPI is a real-time ๐ข๐ง๐ญ๐๐ซ-๐๐๐ง๐ค ๐ฉ๐๐ฒ๐ฆ๐๐ง๐ญ ๐ฌ๐ฒ๐ฌ๐ญ๐๐ฆ built by National Payments Corporation of India (NPCI) and is regulated by the Reserve Bank of India (i.e. the central bank of India)
http://cashlessindia.gov.in/upi.html
http://cashlessindia.gov.in/upi.html
Any bank or financial institution can provide its own UPI-based app for Android, Windows and iOS.
Anyone who has a ๐๐๐ง๐ค ๐๐๐๐จ๐ฎ๐ง๐ญ, ๐ฆ๐จ๐๐ข๐ฅ๐ ๐ฉ๐ก๐จ๐ง๐, and ๐ข๐ง๐ญ๐๐ซ๐ง๐๐ญ can download a UPI app and send money to another person who has a bank account.
Anyone who has a ๐๐๐ง๐ค ๐๐๐๐จ๐ฎ๐ง๐ญ, ๐ฆ๐จ๐๐ข๐ฅ๐ ๐ฉ๐ก๐จ๐ง๐, and ๐ข๐ง๐ญ๐๐ซ๐ง๐๐ญ can download a UPI app and send money to another person who has a bank account.
Owing to ๐ฌ๐ก๐จ๐ซ๐ญ๐๐ ๐๐ฌ ๐จ๐ ๐๐๐ฌ๐ก after the demonitization, everyone started accepting UPI-based digital payments, including street vendors.
Indians were now able to digitally pay for their groceries, drivers, phone bills, and so much more.
UPI-based digital payments exploded.
UPI-based digital payments exploded.
Companies like PayTm (a mobile wallet provider) massively benefited from the demonitization.
So while the 2016 demonetization was not very successful, a second order effect of it was the ๐๐ฑ๐ฉ๐ฅ๐จ๐ฌ๐ข๐จ๐ง ๐จ๐ ๐๐ข๐ ๐ข๐ญ๐๐ฅ ๐ฉ๐๐ฒ๐ฆ๐๐ง๐ญ๐ฌ in India.
By April 2018, the volume of the digital payments had doubled.
By April 2018, the volume of the digital payments had doubled.
Indians went from a cash economy to a digital one almost overnight.
And that trend is expected to grow.
And that trend is expected to grow.
๐๐จ๐จ๐ ๐ฅ๐ was quick to realize the huge potential of UPI and launched a UPI based app in 2017 called ๐๐จ๐จ๐ ๐ฅ๐ ๐๐๐ฒ.
It was an instant hit in India. Within 2 years, it beat all the other local players like PayTm and PhonePe:
It was an instant hit in India. Within 2 years, it beat all the other local players like PayTm and PhonePe:
๐๐ก๐๐ญ๐ฌ๐๐ฉ๐ฉ also just launched WhatsApp payments in India which lets people send money as easily as sending a message.
Mark Zuckerberg said WhatsApp payments was only possible because of the UPI system. https://www.indiatoday.in/technology/news/story/whatsapp-pay-in-india-was-possible-because-of-upi-system-says-facebook-s-zuckerberg-1749802-2020-12-15
Mark Zuckerberg said WhatsApp payments was only possible because of the UPI system. https://www.indiatoday.in/technology/news/story/whatsapp-pay-in-india-was-possible-because-of-upi-system-says-facebook-s-zuckerberg-1749802-2020-12-15
The scale and speed of UPI is unimaginable. Over ๐๐๐ ๐๐๐ง๐ค๐ฌ are now on UPI.
UPI transactions nearly doubled in Q3 2020 due to COVID and it hit ๐.๐ ๐๐ข๐ฅ๐ฅ๐ข๐จ๐ง ๐ญ๐ซ๐๐ง๐ฌ๐๐๐ญ๐ข๐จ๐ง๐ฌ ๐ฉ๐๐ซ ๐ฆ๐จ๐ง๐ญ๐ก in November 2020.
UPI transactions nearly doubled in Q3 2020 due to COVID and it hit ๐.๐ ๐๐ข๐ฅ๐ฅ๐ข๐จ๐ง ๐ญ๐ซ๐๐ง๐ฌ๐๐๐ญ๐ข๐จ๐ง๐ฌ ๐ฉ๐๐ซ ๐ฆ๐จ๐ง๐ญ๐ก in November 2020.
Emerging countries around the world are starting to take notice. They asked NPCI to develop similar technologies for their countries. https://trak.in/tags/business/2020/10/30/upis-success-will-be-replicated-across-asia-npci-plans-expansion-in-malaysia-uae-singapore-more/
With the most advanced financial infrastructure in the world, India is undoubtedly going to see a massive explosion in the digital economy.
