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Friday, 11 November, 2016, 15 : 00 PM [IST]

Online forex business to witness boom post demonetisation

The recent announcement by the Prime Minister to demonetise rupee notes of 500 and 1,000 denominations is being appreciated by online forex brands, who believe that this move will leave no room for transactions under wraps. Akansha Pandey reports.

As the government announced the demonetisation of INR 500 and INR 1,000 currency notes, the decision created quite a ruckus among the Foreign Exchange (FOREX) players. This segment of business which was till date monopolised by offline players with off the record cash transactions and even black money being exchanged for forex purpose, will now supposedly move on to the online players, leading to ease of making payments, said the online forex brands in unison.

The offline players we spoke to reported heavy losses and losing business as majority customers walked in with the two notes, which are no longer legal tenders. However, these players are now gearing up on their online platforms and pushing for mobile transactions. Brands are also pondering on the idea of coming up with newer payment options to save business such as buying card swiping machines for delivery personnel.

Nishima Gupta, Co-founder,
We receive major walk-in clients for buying forex in person and paying in cash in Central Delhi. Post the demonetisation announcement, we have seen a drastic dip in business and travellers are witnessing challenges in purchasing forex in exchange of cash. Prior to that, 75% of our business was via cash on delivery payment options. Now, every customer is giving INR 500 and INR 1,000 currency notes which are no longer a legal tender. We are unable to accept these notes and therefore are heavily losing business. However, those paying the legal tender can still avail the cash on delivery facility.

Going forward, we are thinking of investing in card swiping machines for delivery boys and will be aggressively pushing the transactions on mobile app and portal.

Abdul Hadi Shaikh, CEO,
With the new regulations of discontinuing the INR 500 and INR 1,000 currency notes, the online foreign exchange market will get a tremendous boost. Transactions using proper banking channels will increase leading to better volumes for the online players. The demand for forex will increase as travellers going abroad will transact using banking channels. This is a very welcome initiative and will have a positive impact on the forex industry in streamlining transactions.

Ananth Reddy, Founder and MD, BuyForexOnline
We are an online brand and this new move has had a positive impact for our business. Forex requirements largely come from either the corporate segment or for leisure purpose. Though this regulation won’t really affect the corporate transactions which are by and large official, but over 70-75% of forex purchase for leisure travel is off the books. This unorganised business will now move on to the organised online players as the average transaction value of such dealings was above INR 1lakh.

We have been trying to promote online forex transactions since inception and this move will give a further boost. BuyForexOnline also plans to embark on related publicity campaigns to attract business online.

Sudarshan Motwani, CEO and Founder, BookMyForex
The demonetisation will have major impact on the travel industry, almost similar to real estate or the wedding market. Forex travel spends were significant and use of cash in travel related business was rampant. Now this should change dramatically and while it will be a loss to local money changers who deal in cash for large numbers of transactions, it is a major gain for online FOREX marketplace like BookMyForex.

The rough estimate of forex purchased against cash is at least half official outbound retail market of USD 15 billion, and hence impact of demonetisation would be extremely significant going forward. This move will also impact private overseas remittance (money transfer) market and we expect banks to gain from this move. On the other hand, RBI has limited cash payment for purchase of forex to INR 50,000 only, but this limit is per person.

Hariprasad MP, Senior VP & Head Treasury, Centrum Direct Ltd.
This exceptional move will channelise all payments to the formal banking sector and will curb the black market economy. There is bound to be major disruption in the economy in the immediate term, however, in the long run this move will definitely curb the parallel economy.

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