What Will It Take For a Cashless Economy?
The biggest problem that a cashless economy faces is that there are still a number of people without smartphones.
The government of India constantly pushes towards a digital India, and digital money led to a convenient and easier way to make payments. The ease of conducting financial transactions acted as the biggest motivator of a cashless economy. During the initial stages of demonetisation, people had to wait in long queues for hours together. Digital payment solved this problem and allowed payment of money from anywhere. A person will no longer have to be physically present and conduct the transaction only during working hours of shops.
Transactions are always recorded thereby allowing people to track their expenditure. It becomes easier to determine how much was spent where. To add to the benefits, discounts are provided for using a digital wallet. By going digital, the government provided a waiver of service tax on digital transactions up to 2,000. There will be a 0.75% discount on digital purchase of fuel and 0.5% discount on monthly or seasonal suburban railway tickets, to name a few.
So what causes people to go back to using hard cash instead of adopting digital wallet?
The biggest problem that a cashless economy faces is that there are still a number of people without smartphones. People living outside the urban areas probably have the basic phone models which do not support the technology of digital payment. Moreover, the telecom industries fail to provide good connectivity and this causes another barrier towards a cashless economy.
Complex technologies acts as a major barrier to the spread of digital payments. Users of NFC are concerned about the security and safety of their private information. NFC can face the problem of eavesdropping, where an outsider can listen in on an NFC transaction. Data can also be corrupted and modified. Another technology used is QR codes. The QR code used by the company can be manipulated by criminal hackers making it unsafe.
This leads to a lack of trust among a majority of people. There is also no law that ensures that private information will not be misused. Since there are no means to verify the person entering information online is actually who he claims to be, identity theft poses a serious concern in electronic payments. Hence, people are hesitant to use any method digital payment.
It will take time to establish a complete cashless economy. A major step towards adopting digital payment is through education. It must be ensured that the objectivity of a cashless society is realized and conveying the advantages of the same to the rural masses. Technologies must be established that are as frictionless as hard cash. Another way to develop a cashless economy is to push more merchants to accept digital payments. There must be a system to ensure to a safe and secure online environment for transactions to take place.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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