What’s the whole buzz about cashless economies? Where do we stand and will we ever become a cashless nation? Will the cashless economy dream ever come true? Maybe, maybe not! Anyway, let’s find out.
We, as Indians, are slowly making our way to a cashless society. As our government is putting its efforts towards converting us into a cashless economy, aren’t our minds filled with doubts about whether going cashless will benefit us or not?
For our government, the main objective of going cashless is to curb money laundering, which is quite predominant in our society. But what benefits do we, as common people, get out of it? Before we get to that, let’s quickly learn a little about cashless economies.
What exactly is a cashless economy? It is a term used to define a society wherein cash flow doesn’t exist. All financial transactions take place via Debit Cards, Credit Cards, electronic clearances, digital wallets, and payment systems such as IMPS (Immediate Payment Service), RTGS (Real Time Gross Settlement), and NEFT (National Electronic Funds Transfer).
Despite the numerous efforts, as a nation, India has always been and still is driven by cash. Electronic payments are restricted to a bare minimum as compared to the cash transactions. One of the main reasons for this is that there is a huge rural population in India and most of the inhabitants there either don’t have access to banking or they aren’t well-educated about banking systems. This makes cash their only means. Look at the labourers, for example. They get paid via hard cash and not through any electronic means.
Additional Reading: Paving The Way For Paperless Transactions – Adhil Shetty On Demonetisation
Ever thought about how much havoc the recent demonetising of the Rs. 500 and Rs. 1,000 notes would have caused in the lives of these people? It was a smart move to curb the black money menace in the country. Agreed. But not so smart when it was actually brought into action at the expense of the common man’s peace of mind. Don’t you think so?
We’re not against a cashless society. Rather, we would love it if India turns into a cashless economy. But, the shift shouldn’t happen overnight or at the expense of the common man’s peace of mind.
Anyway, let’s just keep analysing the recent happenings for another day. Coming back to cashless economies, we were talking about the cash transactions in India being much more than the electronic payments. Most of the transactions – small or large – usually happen in cash. For that matter, even those who make use of electronic transfers also use cash!
Think of this – why did e-commerce companies bring forth the ‘Cash on Delivery’ (COD) option when online payments were much more convenient and easier? Because of the simple fact that we, Indians, preferred cash payments over the online, cashless transactions. Well, the e-commerce players did get a lot more customers buying from them with the move.
Although cash transactions still have an edge over cashless transactions, we can’t deny the fact that people are opening up to the idea of going cashless. This mentality shift can be largely attributed to digital wallets and the numerous discounts (such as cashback, discounted prices, etc.) that they offered to catch the attention of customers.
Also, the telecom industry has played a major role in the shift. The smartphone market has grown exponentially and is expected to grow even more in the coming years. With this, the number of smartphone users will exhibit a growth. As a result, there will be more and more users who will take advantage of online banking and online payment systems. If you look at the stats, mobile, NEFT and RTGS transactions have seen tremendous growth.
Also, if you look at the costs involved in maintaining a cash-based economy, you’d agree that going cashless is a good idea. Billions of rupees go into printing the currency notes itself. In addition, banks spend crores every year to add and maintain ATMs. In addition, every time a customer uses an ATM other than that of their bank, their bank is charged for each of those transactions. You could say that almost 0.25% of our GDP is directed towards maintaining cash flow in the country. And that’s a lot of money!
So, how does going cashless benefit us, the people?
Goodbye, Queue
Tired of queuing just to withdraw money to pay for your food delivery? How about paying online using your Credit Card, Debit Card or any digital wallet the next time? Going cashless saves you time and energy. You don’t have to hunt for ATMs, stand in the long queue or be frustrated when the ATM doesn’t dispense cash.
Additional Reading: A Must Read If You’re Headed To An ATM/Bank For Cash!
Ciao, Cheques
Getting paid via cheques is a headache. In a cashless society, you don’t have to go to the bank to deposit the cheque or wait for the cheque to be credited to your account. Quick money, it is!
Au Revoir, Risk
When you go cashless, there is less risk as compared to carrying a lot of currency notes in your wallet or bag. Cashless transactions come attached with enhanced security measures that will keep you safe from transaction-related risks.
Adios, Fraud
A cashless mechanism can help plug the loopholes in the public systems, prevent black money, smother the grey economy and increase tax compliance. As much as this helps our government streamline stuff, it ultimately benefits us as well.
Bonus Read: 10 Tips To Using Your Mobile Wallets Right
Another benefit of going cashless is that it will increase the tempo of circulation of money in the country. Currency notes are materialistic in nature, and hence, it is easy to prevent its circulation. For example, the cash that an NRI takes with them after a vacation will stay idle until their next visit. With cards and digital channels, this can be reduced and thereby circulation can be increased.
At present, there is a mix of cash and cashless transactions happening across the country. Many enablers are working towards turning the cashless-economy dream into a reality. While we haven’t become a cashless economy yet, we are slowing moving towards it. And the future does look promising.