By Shelley Singh, ET Bureau|
Updated: Nov 05, 2017, 12.10 AM IST
Demonetisation accelerated a shift to digital transactions by almost four years. Yet India remains an overwhelmingly cash economy. The government is trying hard to change this. It may not meet its ambitious goal of getting to at least 25 billion cashless transactions this fiscal year, but is supporting any move to remove cash. Today there are more than a dozen ways to pay digitally yet people find reaching out for cash in their wallet the easiest way to pay. ET Magazine shines a light on the digital thrust a year after the note ban:
Cash is Still King
Cash in circulation
1,31,81,190 crore
Cashless forms less than 5% of all transactions in India
TIME DEPOSITS WITH BANKS - Rs 1,03,65,840 crore
TOTAL CURRENCY WITH PUBLIC - Rs 15,32,850 crore
DEMAND DEPOSITS WITH BANKS - Rs 12,60,010 crore
OTHER DEPOSITS WITH RBI - Rs 22,490 crore
Source: RBI; as of October 20, 2017
Ways to Go Cashless
Universal Payment Interface (UPI), started in April 2016 for inter-bank transactions
BHIM (Bharat Interface for Money), a UPI-based mobile app started in December 2016
Aadhaar Pay, a biometrics-based payment system started in March 2017
Number of Credit Cards: 30 million
Number of Debit Cards: 700 million
Other platforms: mobile wallets (Paytm, MobiKwik, Tez etc), payments banks, NEFT, RTGS,USSD (Unstructured Supplementary Service Data), IMPS (Immediate Payment System), PPI (Prepaid Payment Instrument)
Why Cashless Is Not the Best Way to Pay
Too many confusing options: UPI, AadhaarPay, QR, BHIM, etc
Many users opt for assisted mode, or need someone to help them pay digitally or even use ATM
Cashless seen as tool of the educated; it is not as easy to pay digitally as it is to pay in cash
700 million debit cards with users; yet lack of point of sales (PoS) terminals renders them useless
Security concerns and lack of fast, reliable dispute resolution hinder growth of digital
Banks good at managing money, but unable to push transactions. Their m-wallets are hardly used
Yet to target mass use cases like public transport, tolls etc
Least Cash Economy
Sweden, the birthplace of Skype and Spotify, tops the list of countries with least cash in use. Campaign dubbed "Kontantupproret" or Cash Rebellion played a big part in its going cashless. Sweden's 2020 target is less than 0.5% cash in circulation!
iZettle (a tool to accept small payments) and Swish, a smartphone-based payment system are popular digital payment platforms in Sweden