Impact of demonetization of notes on e-commerce and startups

PM Narendra Modi’s bold move to demonetize 500 and 1,000 currency notes as been a welcome step considering the fact that it will help in curbing black money, fake notes, hawala and many such issues affecting our country.

However, this may have a short term adverse impact on e-commerce companies and startups.

As the announcement received mixed reactions by citizens, the e-commerce industry had to maneuver their strategy by terminating the Cash on Delivery (COD) payment mode as it was the most preferred mode of payment by the buyers thereby encouraging customers to choose the online payment system. COD still being one of the highest mode of payments in our country, e-commerce may see a temporary decline in the business. Though, we hope this move will lead to higher electronic payments.

Related Post: 5 ways Amazon is nailing the e-commerce business in India

Another effect could be on angel funding. Many High Networth Individuals (HNIs) who also have been angel-funding are adversely impacted by this currency demonetization and will be reeling under sense of insecurity and lower sentiments. Thus, some projects, which they otherwise would have funded, may lose out. Though we do not see any major changes in their working strategy but surely there could be some adverse effect on angel funding from HNIs, for a short term.

This article was originally published in EdVantez

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