Who are the biggest winners of India's currency reforms? Local Fintech companies! ｜ Thunderbolt: What are the platform companies in India's three-way payment

In a fascinating turn of events in India, the government made an unexpected and sudden overnight announcement to abolish all high denomination currency notes. New Delhi said the move was to crack down on counterfeit currency, fight the black market economy and boost revenue for the tax department.

On the 9th, Indian Prime Minister Narendra Modi announced that notes with a face value of 500 and 1,000 rupees (about $7.50 and $15) would cease to circulate as legal tender from midnight. The news caught the Indian public off guard; they had only four hours after which these high denomination notes would become worthless. As a result, late-night queues at petrol stations and ATMs have become a common sight across India.

India is planning to introduce new Rs 500 and Rs 2000 notes after scrapping the old ones. Industry experts believe that apart from the official reasons given, the sudden replacement of the new currencies is also aimed at realising Prime Minister Modi's vision of a 'Digital India'. His push to transform from a traditional cash-based society to a cashless digital society could be a huge boon for many fintech companies.

India's leading mobile wallet company Paytm has benefited from currency replacement with a surge in its user base. The company has partnered with local telecom operators to help users convert their cash into digital currency. Vijay Shekhar, founder and CEO of the company, said that the government's decision will lead to a golden age of fintech development.

Vijay Shekhar tweeted, "Today is Digital India's lucky day and marks the beginning of the golden age of fintech companies. I am proud to be a part of this era."

The Government of India is taking a number of steps to encourage digital transactions. For example, the Reserve Bank of India launched the Unified Payments Interface (UPI) earlier this year, which allows users to conduct multi-account transactions with just one mobile app. This greatly improves the efficiency of digital currency flows between banks and benefits mobile device users.

Capital Float, India's favoured fintech startup, says the government's strategic decision will attract more customers. The company said, "Previously, our main focus was on SMEs and private shops in India. With currency reforms, more people will have to use digital transactions, which will lead to a surge in our user base."

Snapdeal's e-commerce platform Freecharge also applauded the government's decision as a blow to India's black market economy and a long-term positive impact on the economy. They predict a major shift towards digital channels.

Other fintechs like Ftcash and PayPal also see the government's decisive action as a turning point for the industry.The reduction in circulation of Rs 2,000 notes and the Reserve Bank of India's injection of fresh currency into the real economy will make digital wallets the preferred choice for Indians. As long as users are willing to try cashless transactions, fintech companies are confident of retaining them.

Fintech companies also see an opportunity to remove doubts about digital wallets and other products, insisting that cashless transactions are the future.

Currency reforms have also been a boon for the e-commerce market in India. Due to cash preference, many e-commerce platforms such as Amazon previously had to offer cash on delivery services, which was weighed down by high return rates.

It remains to be seen whether Indians will eventually embrace digital transactions. Success now depends on how well Indian fintech companies play the cards they are dealt.