The demonetisation exercise conducted on November 8 2016, had made wallet adoption rising. But by August'17, this usage may have come down, according to a study.

The study conducted by researchers from Chrome analytics and media suggests that the dip is as high as 40%. The research interviewed nearly 2700 respondents across 8 metropolitan cities asking them questions such as the type of mobile devices, and transaction patterns.

Chrome found that between November to December 2016, usage of e-wallets dipped from 64.7% around November-December 2016 to 38.4% in August-September 2017. The data is unsettling, considering a majority of youth participated in the study. Also, 76% respondents suggested that wallets were far convenient than traditional banking channels such as net-banking.

The research also found awareness growing for Google's new payment app- Tez. 53% of the respondents were aware, possibly from its heavy cashback offers.

Pankaj Mishra, the Founder at the research firm suggested that the wallet model faced challenges with more banks offering digital payments and NPCI's offering of UPI (United Payment Interface) meant an ease in transacting. 62% had started using UPI based services. "E-wallets are gearing up to face the challenges by providing multiple banking services to its existing user base," Mishra said.

Post demonetisation one would have assumed that cash usage might have dipped, but 62% respondents still used cash, while only 36% used digital channels. The survey found respondents spending an average of Rs 1944 per month.

Usage of digital has dipped among merchants too. Instamojo a payments and ecommerce platform witnessed an 82% growth in merchant registrations in November 2016, but suggests that cash still remained the king.

Out of the total merchant sign-ups between November 2016- March 2017, only 30% SMEs continued to use digital payments as of October 2017.

Sampad Swain the CEO and Co-Founder said, "Digital payments in India continue to be at a nascent stage and have not yet substituted the use of cash. While several SMEs adopted digital payments when there was a dearth of physical currency, today, cash and digital transactions are complementary to each other. We have made significant progress in increasing the adoption of digital payments, however, we still have a long way to go in terms of broadening the access to finance and improving the digital payment infrastructure in rural areas.”

Officials from Razorpay, a merchant payment solution provider too suggested that cash is back in the economy. The payment processor increased its business from 20,000 businesses to 50,000 owing to demonetisation. Harshil Mathur, the CEO explains that the company made in-roads into into traditional sectors such as education, government, insurance and mutual funds among others, which were primarily cash driven before demonetization and helped them accept digital payments.

Speaking about card usage, he added that cashless transactions increased, especially through cards and prepaid instruments. "Debit card usage increased tremendously— where debit cards used to contribute to 57% of card transactions, they currently account for 75-80%. We've also witnessed that any transaction above Rs 10,000 has completely moved to digital payments," added Harshil.