Demonetization: Impact on Online Transactions and Alternative Modes of Payment

There has been a great turbulence in the Indian economy with the announcement of demonetization of Rs.500 and Rs.1000 notes. Demonetization is a radical monetary step in which the status of currency in circulation cease to be a legal tender. The move has been taken in India's case to eliminate the use of black money and fake notes by reducing the amount of cash available in the system. This step has a great impact on the overall economy of India in different ways. The effect of demonetization is seen not only in one sector and individual but on a number of sectors and variables like liquidity crunch, consumption level, bank deposits, credit facilities and interest rate. One of its major effects is seen on online transactions and alternative modes of payment. The aim of this paper is to analyze the impact of demonetization on online transactions and alternative modes of payment. The study also attempts to identify the various modes of cashless payments or alternative modes of payments. It further states the most frequently used and convenient modes of payment.