The supply chain impact of India’s cash crunch

An article in the New York Times (December 13, 2016) titled “India Hobbles a Cash Crisis, and Electronic Payments Boom”, describes the shortage of the new currency bills in India following its demonetization of 500 and 1000 rupee notes (which took 86% of the old currency out of circulation).  As a consequence, customers are seeking retailers who will accept electronic payments, with on company that provides such service, PayTM, claiming a 350% increase in its daily cashless transactions and an increase in merchants joining by a factor of 14 per day.  As a result, PayTM has hired more than 3,500 employees, 50% more than its hiring the last two years. Another source from Atos Worldline claims that credit and debit card transactions have increased by a factor of 3.    Will the pressure from cash availability ensure a faster switch to cashless transactions and thus increased efficiency in the long term for the Indian economy ? Will the ability to track all transactions require small shops to charge sales tax, increase their costs and thus their prices and decrease their competitiveness ? Or will cashless transactions make small retailers less exposed to risk because they do not have cash, and thus enable them to reduce their costs, absorb the taxes and remain competitive ?

About aviyer2010

Professor
This entry was posted in consumer, Cost, disruption, retailers, Service Operations, technology, Uncategorized and tagged , , , , . Bookmark the permalink.

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