Cash is king: Year after note ban India still remains a cash economy

Demonetisation accelerated a shift to digital transactions by almost four years. Yet India remains an overwhelmingly cash economy. The government is trying hard to change this. It may not meet its ambitious goal of getting to at least 25 billion cashless transactions this fiscal year, but is supporting any move to remove cash. Today there are more than a dozen ways to pay digitally yet people find reaching out for cash in their wallet the easiest way to pay. ET Magazine shines a light on the digital thrust a year after the note ban:

Cash is Still King
Cash in circulation
1,31,81,190 crore

Cashless forms less than 5% of all transactions in India

TIME DEPOSITS WITH BANKS - Rs 1,03,65,840 crore

TOTAL CURRENCY WITH PUBLIC - Rs 15,32,850 crore

DEMAND DEPOSITS WITH BANKS - Rs 12,60,010 crore

OTHER DEPOSITS WITH RBI - Rs 22,490 crore

Source: RBI; as of October 20, 2017

Ways to Go Cashless

Universal Payment Interface (UPI), started in April 2016 for inter-bank transactions



BHIM (Bharat Interface for Money), a UPI-based mobile app started in December 2016



Aadhaar Pay, a biometrics-based payment system started in March 2017




Number of Credit Cards: 30 million

Number of Debit Cards: 700 million

Other platforms: mobile wallets (Paytm, MobiKwik, Tez etc), payments banks, NEFT, RTGS,USSD (Unstructured Supplementary Service Data), IMPS (Immediate Payment System), PPI (Prepaid Payment Instrument)

Why Cashless Is Not the Best Way to Pay
Too many confusing options: UPI, AadhaarPay, QR, BHIM, etc

Many users opt for assisted mode, or need someone to help them pay digitally or even use ATM

Cashless seen as tool of the educated; it is not as easy to pay digitally as it is to pay in cash

700 million debit cards with users; yet lack of point of sales (PoS) terminals renders them useless

Security concerns and lack of fast, reliable dispute resolution hinder growth of digital

Banks good at managing money, but unable to push transactions. Their m-wallets are hardly used

Yet to target mass use cases like public transport, tolls etc




Least Cash Economy
Sweden, the birthplace of Skype and Spotify, tops the list of countries with least cash in use. Campaign dubbed "Kontantupproret" or Cash Rebellion played a big part in its going cashless. Sweden's 2020 target is less than 0.5% cash in circulation!

iZettle (a tool to accept small payments) and Swish, a smartphone-based payment system are popular digital payment platforms in Sweden