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India faced some troubling times last year but it seems that may have crossed over into 2017. It is reported that digital transactions in the first quarter of 2017 has shown a steep decline.
Since the Rupee was demonetised at the end of 2016, there has been a tremble India has been recovering from. One of which has been a drop in digital transactions. Of course, to those who are very much in tune with global events and the foreign exchange marketplace will know that for every cause, there is an effect. The effect here is the lack of money in circulation within less wealthy demographics. This demographic has shown to be large enough to effect the financial institution.
What we are seeing is the people who were effected by the demonetisation of the Rupee cannot afford to continue with the luxuries they were once accustomed to. The buying power of the country has dropped which has crossed over into the financial institutions. Indians, who made up approximately 69 billion of the worlds remittance in 2016, do not see fit to splurge on digital transactions when financial struggles are imminent.
What constitutes as a digital transaction?
In a world where many transactions are almost expected to be digitally processed it’s tough to identify what constitutes as a digital transaction. A simple definition would be, a payment or transferring of money which handled and executed digitally. To name a few: Money transfer, Mobile payments, Mobile banking, Electronic wallets and Simple card payments. Indian’s have used these methods increasingly in the last decade to manage payments and funds through various services; with this it has increased the number of financial institutions which are catering for such services.
How can this effect money transfer?
Indirectly this could have serious effects on the money transfer in and out of India. If digital transactions decrease at the current rate, it will lower the confidence global investors will have in the power of the Rupee, leading to a fall in the foreign exchange markets. Once the Rupee drops in value, the currency will cost significantly more for every Rupee you wish to buy or sell.
A plunge in a currency almost certainly assures an element of scarcity for that currency. If you previously paid an affordable price to transfer money to or from India, you would be expecting to pay a higher handling fee to any provider for that same transaction.
Vorto Trading partners with SendThatCash for foreign exchange comparisonTue, 02 May 2017 - 12:32 AM