Cashless Economy and its future in India (2024)

FAQs

Cashless Economy and its future in India? ›

In 2022, 46 per cent of real-time global digital transactions took place in India, and the nation has become the second-largest digital market in the world, closing in on China in first place. As the globe continues to move towards a cashless existence, Indian software could come to dominate the financial world.

Now we are able to see that the physical cash is gradually phased out. The future of cashless economy in India is immense, it holds several benefits such as Reducing the cost of printing and handling the cash, and by reducing this it helps in saving our natural resources.

Cashless systems provide transparency for the authorities and individuals are free from the worries of theft and other disadvantages of cash payments. In conclusion, it can be said that going cashless provides a lot more benefits than just convenience to people, businesses and the government in particular.

These coming five years will be critical in transforming India from a cash-first to a less-cash society. The entire digital payments ecosystem needs to be optimized to drive financial inclusion: regulators, banks, payment providers, processors, merchants and customers.

There must be sessions promoting the use of cards, and tutorials to the illiterate about how to use the card and what precautions. Thus, making India cashless is a very strong concept, but it needs the support of proper infrastructure, tutoring as well as a step wise plan to succeed!

Norway has an unbanked population of 0%, meaning every single citizen has a bank account. Only around 2% of payments in the country are made with cash. With 32 ATMs per 100,000 people, Norway is currently one of the most likely countries to become a cashless society.

Cashless society: disadvantages

Elderly people may be less comfortable with tech and less able to make the switch from physical currency. Rural communities could also be left vulnerable, because of poor broadband and mobile connectivity. People with low income or debt tend to find cash easier to manage too.

In India, financial illiteracy and the reluctance to transition to cashless transactions remain the biggest barriers. The internet and smartphone penetration in the country is still catching up. Switching from a cash-based to a digital medium can be a challenge for people who require a deeper financial understanding.

The downsides of going cashless include less privacy, greater exposure to hacking, technological dependency, magnifying economic inequality, and more. Credit and debit cards, electronic payment apps, mobile payment services, and virtual currencies in use today could pave the way to a fully cashless society.

Digital India and Demonetization Drive

During the inauguration of the 'DigiDhan Mela' on 31stDecember 2016, Honorable Prime Minister, Shri Narendra Modi launched BHIM UPI App and urged people to make digital payments a habit to transform the country into a cashless economy.

How long until we are cashless? ›

Physical currency isn't becoming obsolete any time soon, so it's important to weigh up your options before deciding to go fully cashless in 2024. Ensuring you can accept some cashless payments though, is essential to keeping with today's trends and customer expectations.

Which country is using the maximum transaction digitally? India has retained the top spot in the world with 25.5 billion real-time payment transactions, followed by China with 15.7 billion transactions.

A cashless society offers a range of benefits such as convenience, transparency and stability. However, there are concerns about financial exclusion , privacy and security. It has been suggested that disadvantaged groups are most likely to be disproportionately affected by the transition away from cash.

In a country with a huge informal economy, dependent on cash transactions, demonetization was a big political gamble, too. The immediate fallout was chaos, as the country scrambled to cope. There was a rush at banks and ATMs to exchange old notes and withdraw new currency.

Special drives through schools, colleges, Panchayats etc. can help create awareness about cashless/banking transactions. Financial Literacy is a must for bringing more and more people to the digital platform. Digital payment or payment through banks, instead of paying cash should be encouraged.

This study found that forming a cashless society is a solution to efforts to grow the economy and speed of transactions in society. Another benefit is preventing corruption, levies, and fraud where electronic payments made on record have suppressed crime.

The Digital Rupee's offline capability and programmability have been announced by RBI on 8 February 2024. e₹-R will allow offline transactions in places with spotty or nonexistent internet access.

A cashless society could make the economy more efficient by reducing the need for cash handling and storage. This could save businesses and individuals time and money. Additionally, a cashless society would make it easier for businesses to track their sales and profits.

The future of payments in India looks promising, with projections of growing at a 40% CAGR to reach $10 trillion by 2026. UPI, wallets, and emerging options will drive further financial inclusion while delivering enhanced user experiences through innovations like biometrics and AI. 3. How will UPI evolve in 2024?