After Paytm, mobile wallets, the effort is to

After
a major and significant move of demonetization by Prime Minister of India, the
next move lies in making India a cashless economy. Demonetisation  has paved the way for growth of digital
finance in our country. Following this move, Indian government and several
private players collaborated on initiatives to increase the usage of digital
payments across the country. Though India is a country where 97% transactions
were being done through cash, it is majorly a cash dependent economy , yet a
big transformation is being seen nowadays with more and more population using
alternate payment methods such as digital wallets, banking apps etc.With the
growing trend of digital payments through E- payment systems, Paytm, mobile
wallets, the effort is to reduce corruption and fraudulent practices in the
country. The current study aims at 
studying the different perspectives of cashless economy including the
challenges that needs to be faced and 
the ways to overcome them. This paper examines issues in this economic
policy drift. The findings of the study revealed that the stakeholders who are
against the abovesaid  move were  mainly due to the reason that they are more
trapped in cash based system and high rate of illiteracy, inconvenience
associated with digital payments.

Keywords:
Demonetisation, cashless, digital, economy

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INTRODUCTION

As a consequence of the cancellation of
the tender character of recent  five hundred and  one thousand notes, there has been a surge within the digital transactions through use of credit/debit cards
and portable applications/e-wallets etc. To  additionally  accelerate this method, the Central
Government has begin with varied incentive packages and measures for promotion of
digital and cashless economy within the country. Digital India
could
be a  programme initiated  to  arrange  India for a  better  future. 
The Digital India  programme 
could be a leading programme of the Govt of India with a vision to remodel India
into a digitally authorized society and data economy.
“Faceless, Paperless, Cashless” is one in every of expressed role of Digital Republic of India. As an aim of promoting cashless transactions and  changing  Republic of
India 
into less-cash society, varied modes of digital
payments are  out there like Banking cards, USSD (the Unstructured Supplementary
Service Data), AEPS (Aadhaar Enabled Payment System), UPI, Mobile wallets,
Banks Pre-paid Cards, Points of Sale, Net Banking,
Mobile Banking and small ATMs. ( Sunaina Jhingan, 2016). Indian
Government is aiming to create the country a cleaner, more transparent economy by
adopting digitalization as a mode  to
create an amicable climate for foreign trade, boost economic activity, and
ultimately lead the country to the another level of heights amongst emerging
economies.

Source : NPCI

ELECTRONIC PAYMENTS (
APRIL 2017)

 

Volume (Billion)

Value (Rs. Billion)

RTGS

9.5

88512.2

NEFT

143.2

12156.2

CTS

95.3

6990.6

IMPS

65.1

562.1

NACH

212.6

905.2

UPI

6.9

22.0

USSD

188.9

301650.5

DEBIT & CREDIT
CARDS AT POS

231.1

431.4

PPI

89.2

22.3

MOBILE BANKING

61

1443.8

TOTAL

853.1

109602.2

Source:
NPCI

 

MOBILE
DIGITISATION-  A  BOOST FOR CASHLESS ECONOMY

With the result of ban of INR  one hundred and lesser denomination notes previously in circulation,  India  Government  has suddenly felt an
increase in  on-line transactions by the people 
in the form of card payments and mobile wallets to handle their daily expenses. However in contrast to rest of the economies where card payments or plastic money  are the major  source of payment modes  used for daily use, card payments have
struggled to scale-up  due  to the fragmented nature of the
retail sector. In such a state of affairs, mobile as a platform, features a distinctive set of capabilities that may overcome the challenges expose by the Indian payments landscape. Mobiles provide a cheap means that to make money access and payments. It will extend the last-mile reach of banking services either through
business correspondents or  on to the tip shoppers., enhancements within the  telecommunication infrastructure, access to web  property and cheap  smartphones can eliminate the necessity  for hardware supported mounted line connections. Mobile may be a platform that unambiguously combines digital identity, digital price and digital authentication to make cheap access to money services.

 

 

FUTURE OF MOBILE WALLETS IN INDIA

According to research analysts
by 2018 , the country can witness an upsurge in mobile wallet market that
is expected to grow at a CAGR of 140%, while the global mobile wallet
market will manifest a  growth of  CAGR
of 34% by 2020. The reason for  the
fact is  that India is one of the
fastest-growing markets for smartphones in the world. It is expected to reach
at the level of the second largest market by the end of  2017 – replacing the United States. The number
of mobile internet users in India is expected to touch 314 million by 2017, up
from 280 million now.

According to a recent report
by GrowthPraxis, the market for mobile-enabled payments in India grew more
than fifteen times between 2012 and 2015 to reach its current size of $1.4bn.
Interestingly, nearly 60% of users accessed the internet for the first time on
their mobile phones – in marked contrast to many other countries, where desktop
and laptop are the first web-enabled devices that people use.

CHANGING TRENDS

 

In the coming
times, Cash is all set to lose its existence in India, due to increase in
smartphone usage among masses in the country driving a boom in the digital
payments system. By 2020, it is expected that nearly $500 billion worth of
transactions in India will be processed digitally via online  and mobile wallets and other digital-payment
systems which is 10 times the current level, according to a report by Google
India and The Boston Consulting Group.

 

 

 

 

 

 

 

 

Number of Transactions (in
millions)

Source:  Reserve Bank Of India

 

 

LEADIMG M-WALLET PLAYERS AND THEIR USER BASE (MILLION)
2016

                                                                                                             
(in millions)

Pay
Tm

120

ITZ
Cash

40

Mobikwik

30

Citrus
Pay

21

Oxigen

20

Vodafone
M-Pesa

5.4

Airtel
Money

1.7

ICICI
Pockets

NA

Source:  M-Wallets Assocham Report

 

MARKET SHARE OF PAYTM

Paytm
also recorded a whopping 1 billion transactions in 2016, which so far has
not been achieved by any of its competitors.147 million transacting users in 2016
200 million unique visitors on
the app and the web combined
2 billion user sessions
80 million monthly active users
in December 2016

Paytm has
also 89% of the mobile share in the market, with 70% coming from Android, 4%
from iOS, 11% from desktop, 14% from mobile web and 1% from Windows OS.
Compared to last year’s 72%, the share has increased a lot.

The company is now
witnessing about 7 million daily transactions worth about Rs 120 crore, helping
it cross $ 5 bn Gross Merchandise Value (GMV) sales, four months ahead of its
target. Last year, Paytm’s GMVwas at $3 bn.

 

 

 

GOVERNMENT INITIATIVES
FOR MAKING INDIAN ECONOMY CASHLESS

There
has been a increase in the digital transactions through use of credit cards, debit
cards and mobile phone applications, e-wallets etc. To further accelerate this
process, the Central Government has decided to launch a group of incentives and
measures for promotion of digital and cashless economy in India.

These
incentives/measures include:

1.     
The
Central Government Petroleum PSUs have decided to give an incentive by giving a
discount of 0.75% of the sale price to consumers on purchase of petrol/diesel
if the payment isbeing done digitally.

2.      For the enlargement of digital payment systems in rural areas, the Central
Government unitedly with NABARD can providesupport to any or all the eligible banks for preparation of two POS devices every in one large integer villages with population ofbut ten,000. {this can|this may|this can} profit farmers of 1 large integer village covering a complete population of nearlyseventy five large integer UN agency will have facility to interact cashlessly in their villages for his or her agri desires. 
3. No service tax are going to be charged
on digital dealings charges/MDR for transactions upto Rs.2000 per dealings. 
4. Unified Payments Interface has been launched
by National Payments Corporation of India (NPCI) to any RBI’s
vision of transitioning towards a “less-cash” and a lot of digital society. a collection of ordinary application
programming interfaces (APIs)give AN practical system for seamless
transfers, and it’s been designed on high of the cash service (IMPS)
platform.
5. NITI Aayog Committee- The Centre has setup a
committee headed by NITI Aayog corporate executive Amitabh Immanuel Kant, to formulate a technique to expedite the method of reworking India into a cashless economy. The committee has been asked to spot and operationalise within the earliest doable time-frame easy digital
payment choices all told sectors of the economy. this can be AN integral part of
the government’s strategy to remodel India into a cashless economy.
6. The Central Government through NABARD will support Rural
Regional Banks and Cooperative Banks to issue “Rupay Kisan Cards” to four.32 large integer Kisan mastercard holders
to modify them to form digital transactions
at POS machines/Micro ATMs/ATMs. 
7. For paid services e.g. catering,
accommodation, retiring rooms etc. being offered by railways through its connectedentities/corporations to
the passengers, it’ll give a reduction of fifty for payment of those services through
digital means that.All the passengers traveling on railways availing these services could avail the profit.
8. The Central Government Departments and
Central Public Sector Undertakings can make sure that transactions
fee/MDR charges related to payment through digital means that shall
not be passed on to the customers and every one such expenses shall be borne by them. State
Governments ar being suggested that the State
Governments and its organizations ought toconjointly envisage to absorb the dealings fee/MDR charges associated with digital payment to them and shopper mustn’t be asked in grips it. 
9. Discount on policies sold-out online- Public sector
insurance corporations can give incentive, by approach of discount or
credit, upto ten per
cent of the premium normally insurance policies and eight per cent in new life policies of life assuranceCorporation sold-out through the client portals, just in case payment is formed through digital means that.
10. Public sector banks ar suggested that merchandiser mustn’t be needed to pay over Rs one hundred per
month as monthly rental for PoS terminals/Micro ATMs/mobile POS from the merchandisers to bring tiny merchant on board the
digital payment eco system. Nearly 6.5 large integer machines by Public Sector Banks are issued to merchants UN agency are going to bebenefitted by the lower rentals and promote digital transactions.

 

 

 

Benefits of cashless
transaction

It is very obvious that everything
has its pros and cons. Cashless transaction do has some. Some of them are.

1.Control over Black
Money-Black cash has become a hazard currently a day’s cashless dealings become important to manage the black cash. Whenever we
have a tendency to purchase any
product, the distributer don’t disclose
their financial gain to the govt. and thus throw off given the tax {that cash|that cash|that money} don’t return underneath government police work thus contemplate black money. Any properties that aren’t underneath government police work and also the tax haven’t been acquired that’s the black cash. 
2Controlover fakenote 
It is not possible to form pretend noted if the cashless dealings is employed by each individual within the society as a result ofnotes becomes useless. during this state of affairs all the dealings are done on-line. 
3. No funding to act of terrorism 
Funding to the act of terrorism is completed by the unaccounted cash by the black cash holders. however cashless dealings caneradicate black cash similarly as pretend currency thus no support to act of terrorism. 
4. Tax payment 
No one will store cash with themselves as all the dealings are done on-line.
So, everyone must pay tax for what they need. 
5. illicit political
funding 
Political donation is that the major
concern within the country.
Majority of the funding within the party is unaccountable that isn’tdisclosed by the party similarly because the donor.
All that sort of illicit dealings would be stopped if a government follows cashless dealings. 
6. price of printing
and distribution of currency – The price of
printing and distribution of currency would be zero for the cashlessdealings as no paper notes to
print and distribute.

 

 

 

CHALLENGES IN THE PROCESS OF
CASHLESS TRANSACTIONS-

As per TRAI the
total telephone subscriber (in million) are 1058.85 sill it is not in the range
of all the people. The existing telephone infrastructure is not covering all
the area.

Insufficient
infrastructure is
additionally a
significant barricade for
cashless group action. For an outsized country like Asian
country,
there area unit solely two.3 100000 ATMs and fourteen 100000 POS terminals area unit terribly low. Countries like Brazil, Australia, France and therefore the United Kingdom of Great Britain and Northern
Ireland have POS terminals 3 or fourfold that ofAsian country. additionally the client awareness drive is just about missing. The regulative framework for card payment is sound.the present business model of card payment is additionally struggling 
• Illiteracy is one in every of the foremost issue within the path
of cashless group action, as per United Nations agency reportAsian
country presently has the most important population of illiterate adults within the world
with 287 million . India’s illiterate population largest within the world
says United Nations agency report. 
• Hacking is one in every of the problems for cashless group action as per the Economic time three.2 million debit cards info were compromised of the foremost banks like SBI, HDFC, affirmative and
AXIS .
• Universal money Inclusion – Despite the success of January Dhan Yojana in rising money inclusion, it’s been
found that the majority accounts are dormant. twenty third of
PMJDY accounts lie empty and are tagged as zero-balance
accounts.
• Low Penetration of Mobile Banking: The impact
of mobile wallets in fast the
transition to a cashless economy is clearlyexaggerated. Merely26% of Asian country has web access, and there area unit solely two hundred million users of digital payment services

 

 

                                CONCLUSION

The
current scenario across the country is a mix of cash and cashless transactions.
Many efforts are being made in this direction towards turning the economy into
a cashless and paperless economy. Despite of the big initiatives that are being
taken towards becoming a cashless economy; it will take more than a decade to
shift from cash to cashless economy. Rushing the economy into a cashless state
without adequate planning and infrastructure will be disastrous for the country
and its consequences will be bad. A gradual approach towards cashless society
as proposed by the Prime Minister is the right way to achieve the goal. If
we look at the overall scenario of establishing the cashless economy, its
benefits and uses in the present system ,it can be said that cashless economy
is the need of the hour. It has become not only important but necessary for the
country to go cashless for the systematic development in the economy. 

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