India’s Drive Towards Cashless Economy
[dropcap]I[/dropcap]n the midst of the late wee hours of the evening on 8th November, the Indian Prime Minister Narendra Modi summoned a national speech. The speech made rounds over the whole nation and quite aptly created a furor throughout. It was not just the order of the speech but the content therein that created such upheaval. A historic moment set foot when ‘demonetization’ embarked in the nation after a long wait.
With the announcement of demonetization in the nation, the push for cashless economy and curb of black economy enrolled along. We here would look into the cashless thing and seek answers for the same in comparison with its global counterparts.
Join us on our trip as we long for the facts on the cashless economy.
What really is a Cashless Economy?
Cash for the record has always been a cumbersome entity despite its plethora of uses. Although cash picks itself as the major means of the transaction all over the globe, there are pertaining risks and handling that compels us to look for the alternative. A cashless economy is one such alternative option to the usage of the cash and is on the boom at the moment.
A cashless economy uses digital transactions and electronic means of payment as the legal tender so as to case the usage of cash. It’s great to use and offers plenty of benefits for the users and the nation too in form of revenue disclosure.
How the Cashless Economy Trend Flourished Across?
Remember back in the 90’s when the electronic banking kick started a whole new entourage of options for a user. The world then witnessed the offerings like PayPal, NFC payments and other forms like digital wallets. These fine offerings and their benefits are what lured the people to pursue with the cashless option. With time, people became habituated with these options and the perseverance with cash was minimized to some extent.
How is the Cashless Economy going Around the Globe?
We’ll look into a brief for a few nations before going with the tabular representations for some more from across the globe.
- Let’s start off with Sweden, the world’s first cashless society. The nation started the journey years back and have almost reached the penultimate part of their experiment. What’s fascinating about the nation is the acceptance of digital currency all over, whether you buy a candy or a magazine, whether you ride a bus or cab, almost everywhere.
- Around 96% of their population have a debit card and the nation’s payment system sees 89% of transactions done digitally or electronically. The nation also has negative interest rates at the moment, although it’s only the Central Bank who currently offers negative interest.
- Belgium sees over 93% of payments done either digitally or via electronic way. That’s quite a high number in itself. Furthermore, the nation’s 86% of the population have access to the debit card.
- Canada has around 90% of their payments in cashless form with 88% of the population using a debit card for their transaction and more. In fact, the government itself has stopped accepting cash as the legal tenders at its tax centers and charge centers.
- The nation once saw more than 80% transactions paid in cash in the 90’s. However, the number has dropped down to less than 25% at present. The nation accepts digital or electronic cash at big-ticket platforms to the corner vendors. It even has plans to eliminate the paper form of cash by 2030.
Here are a few more nations with the tabular presentation that further looks into the matter.
|Country||% of Non-Cash Payment||% of Population with Access to Debit Card|
Why Indian Government Pushed the Cashless Option Forward?
Cashless Economy presents a viable option for the nation as every transaction can be recorded on. Such records prove beneficial in collecting revenues. In a nation like India, where major transactions are done in cash, the scope of them going under the radar is a quite sumptuous issue. That severally disregards the revenue collection of the nation and prompts corruption.
Furthermore, cash has long been used for financing terrorism and money laundering. Opting for the cashless economy would put a deliberate end to such activities. In a bid to wipe out such acts of terrorism financing and money laundering alongside a collection of more revenues, the Indian Government pushed forth the option for the cashless economy.
How is the Cashless economy going on in India?
There was quite a surge in card transactions and digital wallets after the announcement of demonetization in the nation. In fact, many Points of Sale terminals and machines were sold in the days after the announcement. Many banks and financial institutions came along with offers of credit and debit cards.
The government supported the cause by offering their own UPI-based payment gateway that uses the biometric Aadhar card with direct bank links for payments. It also launched schemes that offered financial rewards for those opting for electronic or digital payments. Even the POS charges were reduced to minimal so as to entice the merchants all along.
The step saw a great surge in card based transactions over the nation with Tier-II and Tier-III cities seeing an upheaval on usages. An economy that saw 95% of payments in cash has already downsized to lower numbers in the brackets of 80%. The nation hopes to see more of it in the upcoming days with the transition into cashless economy finally realizing their long awaited dream.
Well that’s all from us on this one. We will be back with another on the cashless economy pretty soon. Stay tuned.
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