2. Understanding the meaning of “Cashless
Economy”
It Is a system where any type of money transactions are done through digital means like
debit cards, electronic fund transfer, mobile payments, internet banking, mobile wallets.
Cashless economy refers to the economy where transactions are done using digital
payment methods instead of using cash.
The circulation of physical currency is minimal.
3. Impact of demonetization on Cashless Economy
November 8, as Prime Minister Narendra Modi announced that come midnight, Rs 1,000
and Rs 500 currency notes would become invalid.
In his 40-minute speech, Modi said that this was done to weed out black money and to
promote a less cash economy.
A year has passed since then and according to the Reserve Bank of India (RBI), 99% of the
demonetised high value currency notes have come back into the banking system.
But what about increasing the usage of digital payments? Have we, as a country, reduced
our dependence on cash?
4. Types of Cashless Payments
There are many different ways by which a user can make payments without cash:
Banking cards
USSD
Mobile wallet apps
QR Codes
Contactless payments
ECS
Gift Cards or vouchers
PoS terminals
5. Advantages of a Cashless Economy in India
Record of all economic transactions
Fake currency
Increase Tax base
Reduction production of paper currency and coins
6. ADVANTAGES OF GOING CASHLESS
Convenience
Discounts
Tracking spends
Lower risk
GO DIGITAL, GET DISCOUNTS
7. DRAWBACKS OF DIGITAL TRANSACTIONS
Higher risk of identity theft
Losing phone
Difficult for tech-unsavvy
Overspending
8. Government Initiatives in Cashless Economy
1. Demonetization
2. Unified Payments Interface (UPI)
3. Direct Benefit Transfer (DBT)
4. NITI Aayog Committee
5. Pradhan Mantri Jan Dhan Yojana
9. Challenges in transitioning to a Cashless society
I. Acceptance infrastructure and digital inclusion
II. Financial Inclusion
III. Digital and Financial Literacy
IV. Cyber Security
V. Changing habits and attitude
VI. Urban-Rural Divide
10. Is India Ready for a cashless economy?
The difficulty in going digital is exemplified by the data on debit card usage — over 85%
(in volume) and 94% (in value) of all debit card usage is at ATMs for the purpose of
withdrawing cash. The principal purpose for cards in an Indian context is thus a means
to withdraw cash. The exponential growth in debit cards (over 600 million) is a direct
consequence of the financial inclusion drive that led to the opening of over 170 million
bank accounts. Though the move put plastic money into the hands of millions,
effectively it has only shifted cash withdrawals from banks to ATMs, which was not
quite the intent.