Visa and Mastercard, are are sensing an opportunity and hoping to see a seismic switch to digital transactions after years of waiting post India’s sudden withdrawal of its most widely used cash denominations.
Bloomberg reports that the two companies had already been in discussions with the Indian government on ways to shift the economy away from cash.
Moshe Orenbuche, an analyst with the Credit Suisse Group AG, told Bloomberg that the recent shock to India’s financial structure is “something they know how to move in on.”
On Nov. 9, the Indian government banned 500 and 1,000 rupee notes as part of attempts to curb tax-evasion and wipe out the country’s sprawling black market. Prime Minister Naredndra Modi surprised the Indian public with the decision, announcing that all of the affected notes must be deposited to banks by the end of the year if holders want them honored — a huge problem when 40% of the population has little access to banking, or cannot access it at all.
The bills being taken out of circulation reportedly make up about 86% of the country’s currency. The sudden move has left millions of people with stacks of virtually useless bills, and forced poor day laborers to lose work because they have to spend hours in lines to exchange the notes.
A study by the consulting firm McKinsey & Co. reportedly found that more than 90% of transactions in India are still conducted in cash, making the surprise devaluation devastating for many families and individuals who are suddenly unable to purchase essential goods.
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