This is the year dominated by COVID-19 which has made a deep impact on the mindset of individuals relating to their health and wealth. The future seems to be much unpredictable and financial planning is more on a short-term policy. In a cashless economy, all transactions are carried out using different types of payment methods and this does not involve the physical use of money for the purchase of various goods and services.
After demonetization in 2016, India was not ready for the new world of digital payments. Few were already using the convenient technology and few knew nothing about it. The Government imposed the Demonetisation and the entire country had no other option rather than going digital as India was witnessing long queues on ATMs day and night.
With the increase in online payments, we’ve seen a decrease in the long queues to make utility bill payments and the need to be physically present at showrooms and service centres to pay or recharge DTH and mobile services. Business owners and customers have taken to digital payment methods for all sorts of transactions.
To incentivise the move towards a cashless economy, the government has come up with a rash of discounts and freebies on digital transactions. Utilizing mobile phones to make payments instead of opting for the traditional modes of payment has increased tremendously since demonetisation.
When the business operations of most SMEs came to a standstill during demonetisation, the businesses that had shifted to cashless transactions managed to curb losses. In cashless transactions, payments are made or accepted without the use of hard cash. Online payments rule out the necessity to carry cash, and they also save time, as business owners and customers no longer have to queue up for ATM services.
As part of the ‘Digital India’ campaign, the government aims to create a ‘digitally empowered’ economy that is ‘Faceless, Paperless, and Cashless’. The government is now providing waivers on cashless transactions utilised for service tax payments, purchase of fuel, train tickets, highway toll tickets, and insurance schemes. There are many payment apps and mobile wallets that do not charge any kind of service fee or processing fee for the service provided.
The UPI interface is one such example, where services can be utilized by the customer free of cost. There are many rewards and discounts offered to customers using digital payment apps and mobile wallets. There are attractive cash back offers given by many digital payment banks.
All transaction records can be maintained. Customers can track each and every transaction that is made, no matter how small the transaction amount is. Digital transactions will help the government keep a track of things and it will help eliminate the circulation of black money and counterfeit notes in the long run.
Whereas, all the cashless payments made are recorded financial transactions, which makes it easy for the government to track the movement of money. These records also help them to track black money and other illegal transactions. Cashless payments have become one of the greatest means to fight corruption and organised crime in India. With the introduction of cutting-edge technology and constant improvement of existing technologies, we might see faster, more transparent and more secure cashless payments.
The author, Sam Gupta, is Director and CEO at RBP Finivis. The views expressed are personal