by Mish

Massive Growth of Mobile vs Dying Cards

"A number of mobile payments are still small but growth is such that the Wall Street Journal asks Could India’s Cash Blitz Kill Off Cards, ATMs?

The value of mobile money transactions has more than doubled since the nullification of 86% of India’s cash in circulation in November, while those made with credit and debit cards has fallen, and check purchases have barely budged. Mobile payments still make up only a small percentage of overall transactions, but their surging popularity is being noticed.

At this rate, cards and automated teller machines could be redundant in India by 2020, predicted Amitabh Kant, head of NITI Aayog, the government’s economic policy-making body. India’s government, along with removing paper money, has encouraged electronic payments by loosening regulations and adding infrastructure.

Abdul Aziz Ansari had never accepted anything but rupees at his fish stand in a Mumbai suburb. When notes dried up during the cash crunch last year, his sales plummeted. His business looked set to fail, until he signed up for Paytm.

Still, the value of mobile-wallet payments remains lower than checks and cards, but they are catching up to credit cards. In February, mobile payments totaled 69.11 billion rupees ($1.07 billion), significantly behind checks at 6.4 trillion rupees and debit cards at 2.3 trillion rupees but approaching credit cards at 286 billion rupees.

The Reserve Bank of India has been easing rules and building the infrastructure needed to simplify payments. Last year, it started allowing more types of companies to offer digital wallets and has created a new payment system that allows people to connect their identification numbers, phones and bank accounts, providing them with one number for transfers to merchants or other people.

“Your mobile is not just going to be your wallet, it will be transformed into a bank,” Prime Minister Narendra Modi said at an April event promoting mobile money. “This can be the base of financial revolution for the world.”

India’s mobile-wallet leaders said they are adding millions of new users every month.

The phone makers Samsung and Apple, which are leading the race to enable more seamless mobile payments in the West, could have trouble catching up in India, analysts say, because their systems still require card readers that can communicate with smartphones. Samsung Pay launched in India this year, and Apple Pay has yet to start."

Accepted Here

Image placeholder title

Not Accepted Here

Image placeholder title

Would you tie your bank account to a phone?

Death of Cash Coming

Western central banks will be monitoring these events closely. The death of cash money is coming.

Mike “Mish” Shedlock

Cash Chaos in India, 86% of Money in Circulation Withdrawn; Cash Still King in Japan

India’s Cash-Canceling Experiment set off a wave of panic that is still underway.

Consumers Turn Frugal On Cards but Nonrevolving Credit Up Sharply

Total consumer credit rose $19.9 billion in August but credit card debt fell after a sharp rise last month.

Subprime Credit Card Losses Bite Capital One: Income Down 20%, Charge-Offs Up 30%

Capital One missed earnings estimates by a mile as Credit Card Charge-Offs Jump 30%

Three Major Credit Card Companies Ban Bitcoin Purchases

Three credit card companies banned cryptocurrency purchases on Friday and Saturday. They do not want the risk.

Debt Deflation Setup: Credit Card Defaults and Subprime Auto Delinquencies Rise

Serious mortgage delinquencies are leveling off and remain one recession away from a serious upswing. Credit card and auto loan delinquencies are already on the rise.

Serious Credit Card Delinquencies Rise for the Third Straight Quarter: Trend Not Seen Since 2009

Every quarter, the New York Fed publishes a report on Household Debt and Credit.

India Bans Gold Exports “Without a Valid Reason”

In addition to its crackdown on cash, India stepped up its attack on gold. The aim is to cut down on gold imports. India does that in a roundabout way, by cracking down on exports.

Letters from India: How Bad Can the Crackdown on Cash and Tax Evasion Get? What’s Next?

Reader “IB” an India businessman, writes about the crackdown on cash and tax evasion by Prime Minister Narendra Modi.

Asymmetrical Unwind of the Credit Bubble

In How Does One Invest For “Muddle Through”? I talked about unwinding of the credit bubble. Here is the pertinent section: