Benefits of Cashless Economy: Is India Ready for a Cashless Economy?
On 8th November 2016, India underwent the process of demonetization. The 500 and 1000 notes were declared banned. A new set of notes were then pushed out but after a long while. In the gap between the note ban and the arrival of new notes, one payment method started to shine. E-wallets and cashless transactions were now spreading.
United Payments Interface or UPI was launched. This connected bank accounts to your mobile number and enabled users to have a bank to bank transfers at the tip of their fingers. It was launched in 2016 by the National Payments Corporation of India and is also recognized as a mode of payment by RBI.
What is a Cashless Economy?
You must wonder what a cashless economy is? An economy in which transactions of cash are less and transactions mainly take place on credit cards, debit cards, e-wallets, or any digital payments.
This is a much cheaper method and will also help control excess inflation caused by the overprinting of money for circulation in the economy. It will also help in the rapid development of Digital India which is a program launched by the government of India in 2015.
Is India Ready for a Cashless Economy?
A very big question lies in front of everyone. Is India ready for a cashless economy? The answer is relative to most people. Some believe that India is ready for it and some believe that India is not.
The Government of India has a strong belief in the fact that India can transform itself. Since most people are connected with a smartphone in India, it is very usable and will help India move towards a paperless society. The government also announced a few incentives for cashless transactions to promote it.
Merits and Demerits of Cashless Economy
A paperless economy has its own merits and demerits.
The benefits of a cashless economy are
- Reduction in cost: the cost of printing and circulating money into the economy is cut down
- More transparency: since most e-wallets and digital payments require KYC, and this helps the RBI to track transactions.
- Convenience: e-transactions are convenient for both banks and customers. This kind of transactions can take place in any corner of the world, 24*7*365
- Offers: Lots of e-wallets give exciting offers like cash backs on transactions. Cashback is an offer where people get back a certain amount on their transactions
- Rapid development: Due to the high demand for digital needs, India has seen rapid development in many parts of the country.
- Control on black money: digital transactions have proven to cut down the black money problem in India due to higher transparency in transactions
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