The advantages of going cashless are too good to ignore. That’s why India’s digital spends will touch $100 billion by 2020. You should go digital too if you are still using cash. #digitalpayments #cashlesseconomy #savings #CreditCard
The report by Google India and Boston Consulting Group titled ‘Digital Consumer Spending in India: A $100 bn Opportunity’, says that at present Indians spend about $40 billion through digital transactions. This is likely to go up to $100 billion in the next 2 years. That’s a growth of 2.5x that we are talking about. Cashless transactions were going up but demonetization really gave it the push that it needed. So, which are the sectors that benefited from this push?
The report states that the key drivers include e-commerce, travel, hotels, digital media and of course, financial services. Digital payments for financial services are likely to reach to $30 billion in 2020, from $12 billion at present. That’s why BankBazaar insists on paperless and cashless transactions. In fact, most of our products such as Fixed Deposits, Personal Loans, Home Loans and Credit Cards, can be availed using the paperless application process. Mutual Funds on the BankBazaar platform are completely paperless. Even if you insist that you want to submit physical documents, we have no such option! Customers can seamlessly use their bank account to invest in Mutual Funds. It’s all digital!
Having said that, what are the advantages of going digital? You can save tons by not using cash and by making online transactions.
Cash transactions of over Rs. 2 lakhs in a single day have been banned under section 269ST of the Income Tax Act. If you fail to adhere to this law, you will have to pay a penalty that is equal to this amount. Not only that, receiving or paying more than Rs. 20,000 in cash for transfer of immovable property is banned. If you are running a business or profession, paying more than Rs. 10,000 in cash is not allowed. Going digital (read using your Credit Card or Debit Card) will help you avoid penalties.
Additional Reading: How To Use Digital Wallets Effectively For Online Transactions
Most Debit Cards and Credit Cards provide you with reward points and discounts for shopping and dining. There are plenty of cards out there that give you cashback for every transaction that you make using your Credit Card. Imagine getting a 5% cashback for every purchase; isn’t that a good thing? The government has waived the Merchant Discount rate (MDR) on Debit Card transactions up to a limit of Rs. 2,000 for the next two years. The MDR will be borne by the government. You can also get a discount of 0.75% when paying for fuel using your card. The cashback will be credited to your account by the bank within three days of making the transaction. If you travel by train, you can get a 5% discount on digital payments made for railway catering and accommodation.
Coming to financial services, you get a 10% discount when you buy General Insurance online from public sector insurers. You will get an 8% discount if you buy Life Insurance (online term plan) from the Life Insurance Corporation (LIC). This space just isn’t enough to write about all the benefits that you get by using your Credit or Debit card to make payments!
Additional Reading: Going Cashless: Here’s What You Should Know
No paperwork hassles
When spend using your Credit or Debit Card, it is easy to track those expenses. You can get all the information from your account statement. You can use this information to check if you are within your budget. When you choose the paperless process, you don’t have to worry about storing those papers or losing photocopies of your documents. When everything is digital, you can finish your purchases in minutes in the comfort of your home.
India’s internet users have actually doubled in the last four years and this is just the beginning because Indians still spend only 10% of their monthly purchases online. When more people get on to the cashless bandwagon, the economy will run seamlessly with more honest taxpayers and better-informed consumers.
This article was originally published on LinkedIn.