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1. Introduction
The Indian Prime Minister Narendra Modi announced on November 8, 2016 regarding the demonetization, mentioning that 500 and 1,000 rupee currency notes in circulation will not be legal anymore. The Government of India (GoI) directed the Indian citizens to deposit the old denomination notes of 500 and 1,000 rupees in their bank accounts and exchange them for new currency notes. GoI issued new currency notes of 2,000 rupees to avoid the cash crunch. This unexpected demonetization move, which happened earlier in 1946 and 1978, took everyone by surprise, as it occurred for the third time in the Indian economy (PWC, 2016).
The Indian economy is largely based on cash based transactions. As per the Reserve Bank of India, 86 per cent of the Indian bank notes are in 500 and 1,000 rupees denominations (RBI Annual Report, 2016). Though 2,000 rupees currency notes were introduced by GoI to replace the old notes, still the economy witnessed a massive cash crunch. There were long queues in front of the banks, and automated teller machines (ATMs) were closed as the supply of cash was limited. One of the important solutions to this problem is the alternate modes of digital payment systems. GoI notified the citizens regarding the introduction of cash withdrawal limits. Scarcity of cash fueled faster adoption of alternate methods of digital payment systems.
As per the Indian Payment and Settlement Act 2007, digital payments are defined as electronic fund transfers. When an individual initiates the transfer of funds through an electronic medium by means of authorization or bank instructions to credit or debit an account maintained with that bank, it is called as digital payment system. It also comprises ATM transactions, transfer through telephone, point of sale transfer, internet and card payments along with direct deposits or withdrawal of funds. Hence, the digital payment systems are dependent upon the different technologies which are as discussed in Table I.
Demonetization triggered millions of citizens to shift and embrace digital payment systems. According to Nielsen Report Part II (2016), post the demonetization announcement, there was a windfall for digital payment system providers like digital wallets. A major chunk was driven by aggressive advertising along with swift adoption by small business firms. There was a quick adoption...