Demonetization in India has been a trending topic for quite some time now since the announcement by Prime Minister Narendra Modi on national television. Financial analysts around the country have been dabbling about the effect of cash crunch on every sector. Thanks to the change in payment methods, business modules have still benefited after the demonetization blow. But, there have also been some initial negative effects before the online payment methods began to be successful. In this post we analyze it’s effects.
In spite of being a part of the new generation, I myself have been a bit hesitant when it comes to online payments via credit/debit cards as well as the E-wallets. Thus, for people like myself- demonetization has hampered online shopping for a while.
But, online payments and digital cards are not as complex as before thus making it easy for people to purchase in spite of the currency ban.

Let’s take a look on the effect of demonetization on the e-commerce industry:

Undelivered Orders

As mentioned before – For people like myself, we settle for the cash on delivery option. A COD order is the one where in your place an order online and agree to pay on the spot when delivered at your doorstep. But, due to the halt on the usage of notes, this task could not be completed. Thus, there had been a sudden decrease in the amount of purchases done online, proving to be a negative impact and a significant loss for e-commerce businesses like Amazon, Flipkart, Snapdeal and so on.

Suspension on COD orders

Ban of notes in return created a hiatus for Cash on delivery and thus, several retailers had to temporarily stop their service of cash on delivery purchase option. This turned out to be a blow for the revenue generation of a few retailers.

Reduction in the number of orders

From a popular survey conducted by business insider, 83 % of consumers in India settle for COD option. As a result of demonetization, it had a detrimental effect on the number of orders placed online as most consumers did not wish to settle for online transaction.

Short term impact on e-commerce partners

Undelivered orders, suspension of COD orders, reduction in the number of orders placed altogether proved to be a major blow for a few e-commerce partners, but economists studied for it to be a very short term blow and with time, things would settle down.

Expansion of Payment options

Credit and debit cards are the existing options for online payments; but the additional option to patch this void would be the online wallet service: for example: the amazon pay balance usage for purchase. This option made the consumers feel much more comfortable during online transactions.

Lucrative Discount options

Seeing the decrease in the number of orders placed online, retailers began to provide several discount offers to attract customers for purchase of their items.

Go cashless to make payments

To encourage customers on the usage of online payment facility, retailers also began to provide offers and discounts specifically to those consumers who decided to go for cashless payment. Thus, it helped in attracting customers back to e-commerce websites.

Impact on online payments

One good impact of demonetization was the increase in the usage of cashless transactions via credit and debit cards rather than being tied up in unending queues at the ATM. Even something as simple as purchase of vegetables from a vendor began to be done via mobile wallets such as PayTm- with cashless money transfer. Vendors as well as public transport workers settled for online payments due to the ban on notes.

Thus, demonetization proved to be a temporarily blow for consumers and e-commerce businesses but helped us to adapt to much more efficient, quick and easy method of payments on the long run due to encouragement on going cashless.


An Architect, aspiring visual designer and a passionate writer. In my years of graduation I had a chance to explore and evolve as a designer and focus on how versatile a professional can get. I hope to excel in the field of user experience design as well as continue with my interest in expressing myself through the art of writing.


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