A journey towards a cashless economy can catalyse economic growth

Source: The Hitavada      Date: 31 Jul 2017 12:20:28


By Amitabh Tewary,

India is experiencing a revolution in the payments space. The Government’s demonetization decision along with various other reforms have shown us how going cashless can make life easier. There is increasing competition against cash. Newer companies have entered the payments market and there are a variety of cashless solutions for the consumer to choose from. People are also swiping debit cards for daily purchases and not just using them for cash withdrawal at ATMs. This is an encouraging trend.

This has been further supported as PoS terminals in the country have grown from 12 lakhs to 27 lakhs throughout the country, thanks to the Government’s strong initiative to strengthen the acceptance infrastructure.

India has traditionally been a cash intensive economy with 96 per cent of transactions still happening in cash. But, the journey to a less cash economy has begun and digital payments is leading the change. Increased penetration of smartphones beyond cities and affordable mobile internet is making access easier than ever before. Further, adding to this are newer products such as BharatQR and contactless solutions or mobile wallets that could be used in the remotest corners of the country.

Reducing dependency on cash not only makes life easier and better, but has long term economic benefits that can add to a country’s overall well-being. For instance, the residents of Delhi together spend 60 lakh hours and Rs. 9.1 crores (US $1.5 million) to obtain cash, according to The Cost of Cash in India report commissioned by Mastercard along with the Fletcher School, Tufts University. This only goes on show how reducing dependency on cash can help cut down on both cost and effort. Innovation is leading the change and smart forms of payment are driving digital adoption.

Adoption of cashless measures can make life way easier and help save time and money for anyone and everyone. Governments can manage tax collection or other governance related activities much better by encouraging digital modes of payment. Similarly, a merchant can manage his daily operations much easily by shifting to digital modes of payments. Merchants can also cut down on time and money spent in record keeping and revenue management with digital payments.

This can help increase business efficiency for them in many ways. Likewise, for the consumer, using digital payments can make his life way easier by saving on time and effort. Besides, going cashless also brings in other benefits such as enhanced security, protection from theft and other physical threats that can lead to loss of money.

However, what is needed at the moment is a willingness to accept digital payments in daily life. The onus now lies on the industry and the Government to address consumer concerns and strengthen the security framework for digital payments. There is also a need for stronger collaboration between the Government and private players for organizing awareness initiatives and encourage adoption of digital payments.

People need to be made aware on how digital payments can be more secure and help save time and money. And once digital adoption begins picking up at a mass level, the economic benefits should naturally pour in.
(The author is Vice-President, Business Development, South Asia at Mastercard) n