India embarking on a dynamic cashless journey

Magazine

Team IndustryOutlook | Monday, 19 August 2019

Tied to the modernity, our daily lives are determined by the number of plastic cards we carry, or for that matter, the number of transactions we undergo through digital payment apps. This pattern of consumer behaviour has been exceedingly dominating the economy, for a couple of years now. Majority of urban Indians travel cashless, today. With the onset of electronic wallets like Paytm, Google Pay and so on, the method of paying has witnessed a huge alteration. People now feel safer with keeping their money stored in a digital wallet rather than carrying it physically.

This rapid transition from real money to digitalized cash gained momentum after our Prime Minister introduced Demonetisation. Even banks didn’t fall behind; they equipped their portals with effective functions, so that transaction becomes seamless and hassle-free.

However, the predicament lies in the question- Is India ready to be called cashless? India’s reliability on cash has been accurate since ages. Different denominations of currency notes have thrived in our pockets and definite exchange of money has taken place earlier, none can forget that period of pragmatic payments! But just to stimulate economic growth and catch up with China,

can the whole country overnight shift to using digital payments?

The answer is unsure of, as many know that the mobile coverage and the internet connectivity in India are miserable. Also rural India, still lags behind when it comes to access to internet; in times of any type of significant crisis, people living in remote areas hardly have the choice to look up anything on the internet. Moreover, the situation in urban India is not that glorious. The practice of owning a smart phone might appear common in metropolitan cities, but the idea of having to pay through digital mediums might still be despising for some people.

Credit Suisse’s report says that 72% of India’s consumer transactions take place in cash, despite several online payment platforms. Economists and innovators don’t realize the fact that people needs to go through that psychological and behavioural changes to accept such digital transition and this might take years for common people like us to get accustomed to it.

While such concerns continue to prey on the economy; Navtej Singh, CEO of digital business at Hitachi Payment Services Ltd. has quoted that "As a consumer I do not have the confidence to not withdraw cash, because 70% or 80% of places where I need to spend the money, digital payments are not accepted."
Therefore, many shopkeepers, in spite of having access to Paytm and PhonePe are unwilling to receive digital transactions due to poor linking issues and a resistance towards paying charges for futile transactions.

The benefits of India becoming cashless are endless, for instance real estate prices will reduce because of restraints on black money, transaction costs will come down and so much more. Yet India has a long way to go, keeping in mind its challenges and age-old financial systems.

Modi’s cashless India is considered as one of the biggest dream projects and in order to move towards that goal, the financial prejudices have to be broken and fair amount of awareness has to be spread to make people use such digital wallets featuring disciplined monetary structures.