
India rupee ban: Snapdeal to deliver cash - happy-go-lucky
http://www.bbc.com/news/business-38412919
======
Abishek_Muthian
Snapdeal is just using the opportunity to get more customers into it's
ecosystem, it says that it would take 1 rupee (0.015 USD) commission to
deliver 2000 rupees (29.495 USD) and that too from the cash received from COD
(cash on delivery). People paying online for products on e-commerce sites is
all time high in India as they don't have cash to spare, so I don't really see
a way it's going to be successful.

As for Paytm, I really doubt their commitment to the security of their
products. This was my experience on vulnerability disclosure on their product
- [https://medium.com/timebender-technologies/paytm-says-to-
me-...](https://medium.com/timebender-technologies/paytm-says-to-me-that-its-
pos-feature-didn-t-have-a-security-risk-b6b23e5af8c5#.o4teeselz)

~~~
khrm
I am quite surprised to see their response. First thing, this whole wallet
business is fishy and full of security vulnerability. Who is
certifying/auditing these wallets companies like in case of internet banking
and card transactions?

~~~
Abishek_Muthian
It should be the same card agencies themselves, they require the application
which takes in card details to adhere to PCI DSS guidelines. But it never was
designed to have the user enter card details on merchant's phone.

------
impy
As a foreigner visiting India with the demonetisation is also not the most
pleasant experience, I had landed on the day that happened. A lot of places
luckily accepted credit cards, though in a few cases the authorisation failed
(which can also occur at the ATM's, so be careful when queuing) and they don't
always have the best infrastructure either
([http://imgur.com/a/iJDfw](http://imgur.com/a/iJDfw)). PayTM isn't an
alternative as a foreigner, since you can only charge your account with Indian
issued debit or credit cards.

~~~
wyager
The whole "demonetization" argument seemed blatantly propagandistic to me. The
stated goal was to repatriate "black money" (theoretically large untaxed cash
reserves held by rich Indians). Let's assume that "black money" is a real
problem and not an overstated political bogeyman. Let's ignore the fact that
the last thing anyone with serious money is going to store wealth in is cash
(especially not Rupees). So you get rid of your largest denominations and what
do these theoretical rich people do? They sell their cash at a slight loss for
lower denominations. Poor (but still identified and banked) people can make a
quick buck by trading all their cash for slightly more cash at the soon-to-be-
useless denominations and trading them at a bank (under the allowed daily
trade limits).

On the other hand, anyone disconnected enough not to have an ID or a bank
account but wealthy enough to have a few high-denomination bills gets screwed
because changing money at the bank requires you to have an ID or an account.
They can also sell their cash on the black market, but they get a worse deal
because they're trying to hawk a couple bills, not the large bulk transfers
that wealthy people are doing.

And, of course, this move decreases the fungibility of Rupees and increases
our expectation that the Indian government will do something similarly
inconvenient in the future. If the Rupee ever hopes to be a strong currency,
this probably didn't help.

I suspect a secondary goal of this move was to initiate a migration away from
cash. Once you get rid of cash and make all legal money banked, you can do all
sorts of fun stuff like impose negative interest rates. The ECB, Denmark,
Sweden, Switzerland, and Japan have already experimented with negative
interest rates; I expect to see other nations make moves towards it as well.
It's an effective way of doing things like propping up property values, as
long as you can force people into it.

~~~
DaiPlusPlus
I believe the aim was not to repatriate cash, but to help tackle corruption in
India, which is endemic, and often takes the form of literally under-the-table
cash payments to public and local officials, policemen, and the like. By
eliminating high-value cash it means these illegal transactions become less
practical: illegal participants must either use larger amounts of less-
valuable currency (passing bricks of notes isn't exactly subtle) or use
foreign currency (harder to launder). The hope is that people would find it
easier just to keep things above-board because all transactions become
electronic, logged, and auditable.

Though I'm sure some enterprising folks will find way to electronically
launder bribe money somehow - I expect a lot of people to suddenly inherit
money from long-lost foreign relatives.

~~~
entropyneur
High value cash wasn't eliminated. In fact, quite the opposite: previously the
highest value note was Rs1000, now it's Rs2000. Although calling $30 high
value is a bit of stretch.

~~~
brianwawok
Average salary in India is RS18k.. so RS2k is 1/9th of that.

US average salary is ~50k.. so it would be equivalent with a $6,250 note..
which to me sure seems like a high value note.

------
djsumdog
I still have a 500 rupee somewhere; most likely packed in a box in my parents'
basement.

Did no one consider the consequences of this move? Surely there were people in
government that testified to the fact that over 80% of the currency in
circulation were these larger bills?

Either this was intentional to move to the country to electronic payments or
some elected people didn't listen to anybody, did no analysis and were so
clueless they didn't realize this would happen?!

If their elected officials really cared about the people as much as they cared
about stopping corruption, they should have figured out some type of gradual
roll-out policy. Or they could have simply allowed 500/1000 notes but refused
to print any more and ordered banks to send all of those notes to their mint.
They could then slowly replace the notes over a year and eventually, declare
500/1000 not legal tender after a year, rather than trying to do this all at
once.

~~~
vidarh
The point of doing it all at once was to make it harder for those with untaxed
cash to have time to find a workarounds. A longer window would defeat the
stated goal entirely.

> Did no one consider the consequences of this move? Surely there were people
> in government that testified to the fact that over 80% of the currency in
> circulation were these larger bills?

The supposed large hoards of untaxed cash in these denominations would be the
very argument _for_ this move.

It's quite possible they've messed up the implementation or got the
distribution of these notes wrong, but the stated argument for doing this
would be entirely moot if they didnt make up a large portion of the currency
in circulation.

~~~
denzil_correa
> The point of doing it all at once was to make it harder for those with
> untaxed cash to have time to find a workarounds. A longer window would
> defeat the stated goal entirely.

Lesser than 10% (most aggressive estimate) of the unaccounted income lies in
cash. As such, the entire exercise has higher costs than benefits. The idea
AND the implement both have no sound reason.

~~~
whitenoice
Could you provide source to how you came about with that estimate?

~~~
aianus
Not OP but the Indian Central Bank estimates there are ~$239 billion in
outstanding currency [0], and the national wealth of India is estimated at $3
trillion [1].

Rich people have a much lower cash:wealth ratio than poor or middle class
people so I highly doubt many rich people, no matter how corrupt, are losing
more than 10% of their wealth with this move.

[0]
[https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=...](https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=38857)

[1]
[https://en.wikipedia.org/wiki/National_wealth](https://en.wikipedia.org/wiki/National_wealth)

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subbu
Snapdeal is not going to win the e-commerce market by delivering cash. They
are just deviating even farther from their goal: delivering goods. While
Amazon continues to make micro optimizations to improve their service both
Flipkart/Snapdeal have taken their foot off the peddle.

~~~
shripadk
I have to agree with you on this. Amazon India has a wide range of product
selection compared to both Flipkart/Snapdeal. I can also import US products
from Amazon.com (or Amazon US) and also their equivalent (but slightly
smaller) "Global Store" in Amazon India.

Flipkart had a golden opportunity to practically take over the e-commerce
market in India. But they (like most other Indian companies) aren't/not
willing to expand enough.

~~~
geodel
I do not think it is about willingness. They tried and still trying whatever
they could. It is just that economic realities of India put them in their
place.

Somehow the rather unfounded assumption was say they serve 50 million
customers today and Indian population was 1.25 billion so there is opportunity
to grow 10-20 times. The simple fact is 50 million might be close to maximum
market size as remaining population simply do not have that kind of incomes to
sustain e-commerce companies peddling frivolities. I say frivolities because
if I am earning USD 5K/year equivalent in India I am in top 1.5-2% Indians. By
Indian government tax data less than 3% people file income tax returns in
India and remember those all who file returns does not necessarily means they
pay income tax.

There is of course no reason for Flipkart/snapdeal founders to admit basic
facts as their companies made them fabulously rich.

~~~
shripadk
When I talk about willingness I'm talking about expanding Internationally to
compete with the likes of Amazon and Ebay. Alibaba
([http://www.forbes.com/sites/helenwang/2015/07/08/why-
amazon-...](http://www.forbes.com/sites/helenwang/2015/07/08/why-amazon-
should-fear-alibaba/#15f36e2a1bde)) is already doing that.

India is definitely poised to become a booming e-commerce market but it has no
where near peaked for Flipkart/Snapdeal to be content with. They just cannot
depend on the Indian marketplace alone. Just because we are 1.25 billion
strong and will probably adopt cashless means does not automatically make us a
market for Flipkart/Snapdeal. They have to compete to get the marketshare. The
market is dictated by one who is not just innovative but also caters to all
sections of the diverse society. Sadly, only Amazon is able to currently
provide a complete experience even though it's a late entry into the Indian
marketplace. Flipkart/Snapdeal is already losing a major portion of their
marketshare to Amazon and that decline is going to continue unless they expand
and compete directly with Amazon in their own turf. Innovation alone cannot
sustain Flipkart/Snapdeal.

The consumer market is still heavily dominated by the US and European
countries. If they do not expand they are doomed. They do not have enough cash
to compete with the likes of Amazon/Ebay who have a better inventory and
provide access to the global marketplace.

------
zaatar
Do cashback charge cards exist in India and are they popular?

The fees are 1 rupee for every 2000 rupees (i.e. 0.05%), so with a 1% cashback
card, each time I were to charge 2000 rupees, I would get back 20 rupees, but
pay out 1 rupee in fees to Snapdeal, making a profit of 19 rupees. Repeat
1000x per day, I'm now earning 19000 rupees a day, sitting at home.

I guess Snapdeal won't deliver 1000x per day to the same address, and perhaps
1% cashback cards don't exist to begin with ...?

------
wav-part
A very detailed survey regarding the demonetisation though slightly
judgemental.

[https://decipherdemon.blogspot.in/2016/12/a-monumental-
disat...](https://decipherdemon.blogspot.in/2016/12/a-monumental-disater-in-
offing.html)

------
DickingAround
Anyone have any other links of interesting news in this area? Massive thing
happens in a massive country and even NPR is not talking about it. Interested
to get some news/conclusions-so-far.

~~~
navait
[http://www.npr.org/sections/thetwo-
way/2016/11/08/501199606/...](http://www.npr.org/sections/thetwo-
way/2016/11/08/501199606/in-surprise-move-india-voids-500-and-1-000-rupee-
bills-to-fight-corruption)

~~~
DickingAround
Yea, I know it was mentioned and I get the stated reason of why. But it's kind
of an on-going event and presumably it's evolving as we go (hence this
headline). I'm looking for more news.

------
norswap
What about smartphone powered payments?

~~~
dogma1138
Local smartphone based payments usually require a local bank account or a
debit card; they often do not work with credit at all since they can't hussle
commissions nor want to onboard the risk of dealing chargebacks or fund
clearance.

Local smartphone based payments also require infrastructure which is not
always available in india, power and connectivity can be very spotty even
worse than some places in Africa. Also with most of these micro payment
services they don't really use new tech, a lot of the time it's still based on
SMS and is rather insecure and prawn to fraud.

You aren't going to be issuing smartphones with NFC and fingerprint readers
and the terminals needed to accept such payments in impoverished regions.

Anything like Google/Apple pay and you need a bank account which many of those
peoples don't have or don't want to have/use, and the Government is unlikely
to like a secondary economy like in some African countries which is based on
cash bought prepaid call minutes which are then used as currency.

~~~
norswap
I'm confused. Isn't getting cash a problem only if you have a bank account?

~~~
dogma1138
The problem is that the cash was traded effectively outside of the economic
system.

In most countries Cash passes through banks or clearinghouses after a
transaction is completed.

Your employer pays you with a cheque or a bank transfer; you take out cash
from the ATM; you buy groceries with that Cash; The store deposits the Cash at
a bank or a clearinghouse and receives a cheque or has it's account debited.

In this chain the majority of transactions; even cash transactions are "on
paper", the problem with India is that people effectively trade with Cash
without involving the banks; you get paid in cash (w/ no taxes paid); you buy
something from the local grocer w/ cash w/o any recepiet; the local grocer
pays their suppliers with cash again often w/o any receipts; pays their
employees with cash and so on and on.

This means that the majority of the transactions are in effect conducted in
grey or black markets.

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nautical
Ola was also doing something on the same line .

