Cashless India (2024)

FAQs

Is India going to be cashless? ›

India has made significant strides towards a cashless economy, evident from the rapid increase in digital transactions and the government's push for digitisation. However, challenges such as inadequate digital infrastructure and limited digital literacy still exist, which need to be addressed for a complete transition.

Cashless society: advantages

When people are handling less cash, bank robberies, burglaries and corruption drop. Because cash is essentially untraceable, it's a useful tool for criminals, where digital currency is less easy to exploit, and can be shut down quickly if it falls into the wrong hands.

Despite phasing out Rs 2000 notes, cash in circulation has more than doubled since FY'2016-17, the year of demonetisation and launch of UPI. Tracking HSBC PMI and CMS cash index shows that they have moved in tandem indicating that cash is also as important as digital modes of transactions.

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.

Sweden's switch to electronic cash started after a surge of armed robberies in the 1990s, and by 2022, only 8% of Swedes said they had used cash for their latest purchase, according to a central bank survey. Along with neighboring Norway, Sweden has Europe's lowest number of ATMs per capita, according to the IMF.

But back in 2016, it did a massive experiment to invalidate 86% of the country's paper currency. It was an effort to raise more tax revenue. And that big announcement forced people to either spend their cash, exchange it for other bills or put it into a bank account, and it was a catastrophe.

China's cashless evolution is a remarkable story, as the country transitioned in less than two decades from a cash-first society to one with an 86% mobile payments penetration rate.

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.

In a cashless society, financial transactions are not conducted with physical banknotes or coins, but instead with digital information (usually an electronic representation of money).

Tip: The US dollar is also widely accepted in India, but it is still recommended to get some rupees in small denominations which can be used in remote areas where the US dollar may not be accepted.

Should I get rupees before I go to India? ›

In India, currency is the Rupee. Because the Rupee is non-convertible it cannot be taken out of India, so you cannot get currency before you travel. You can change money at the airport, in banks and large hotels. ATMs are available too, especially in more established resorts.

Yes. In many cases, cash will be the only option for making payments in India. In general, making sure you always have some cash in Indian rupees, and a travel card for spending or getting cash from an ATM, is a good choice so you have a back up plan if you ever need it.

CONCLUSION:

Greater application of digital payments will save a lot as it will help in bringing down the cost of cash in India. The development of a cashless economy would lead to transparency, curb corruption and lead to convenience for economic growth.

Rethinking Payment Systems

It's often more efficient — and more secure — to accept only electronic payment types like credit or debit cards. "Going cashless saves the business time, costs and the hassles of handling, storing and depositing paper money."

The US is moving toward cashless payments, with a substantial increase in the use of mobile wallet apps and contactless cards. A report from the Federal Reserve Bank of San Francisco found that payments made using cash accounted for just 18% of all US payments in 2022.