cashlesseconomy-200501105149

CASHLESS
ECONOMY
What is Cashless Economy ??
 Cashless economy is an economic system where small amount of cash is
used in transactions.
 Cashless economy is based on transactions made by credit cards, debit
cards, wallets or digital modes.
 Cashless economy is cost effective, growth friendly, business friendly,
pro-financial inclusion, etc
 Cashless economy requires robust digitalization.
Introduction and Background
 There is a worldwide tremendous interest among policy makers,

academicians, and commercial enterprises to explore the possibilities of
moving towards a cashless economy.
 It is widely believed that the movement from cash to cashless economy
has significant benefits
 Economy has always moved through period of transformation from time
immemorial.
“The age of mercantilism which witnessed trade through exchange of gold
transformed into barter system. Barter system, process in which exchanges
done through commodities. Later with the arrival of industrialization, size of
economy expanded which resulted into invention of money or cash(Consist of
coins and currency notes).”
Literature Survey
 According to Moody’s Analytics study, greater usage of electronic card payment

products added $983 billion in real U.S. dollars to the GDP of 56 countries they studied
from 2008 to 2012. Card payment has raised consumption by an average of 0.7% across
the 56 countries. The real global GDP grew by an average of 1.8% during that
timeperiod (Zandi et al. 2013).
 India is embracing cashless economy gradually by moving towards less cash society.
This is what manifested in demonetization that was announced on November 8 2016
wherein 86% of existing currency from circulation was withdrawn in order to curb the
menace of cash-driven economy.
 Sweden is the most cashless economy of the world. According to Payment Habits in
Sweden (Risbank 2018) cash now accounts for just 13% of payment stores.
 Vietnam announced a bold initiative to become 90% cashless retail economy by 2020.
“The road of cashless society leads to cashless economy which itself passes through
the heart of robust digital economy. ”
India’s Approach
towards
Cashless Economy
Objectives
 To study the concept of Less-cash society; cashless economy and digital economy.
 To evaluate the change in economy in pre-demonetization and current scenario.
 To evaluate cost –benefit analysis of cashless economy.
 To curb shadow economy, corruption, terror -financing, human and drug
trafficking, counterfeit-currency etc.
“We want to have one mission and target: Take the nation forward –Digitally and
Economically”
Narendra Modi(Prime Minister of India)
RBI-A CASHLESS ECONOMY VISION 2018
“Building best of class payment and settlement systems for a ‘less-cash’

India through responsive regulation, robust infrastructure, effective
supervision and customer centricity”
 Broad contours of Vision-2018 revolve around the 5 Cs:
 Coverage – by enabling wider access to a variety of electronic
payment services
 Convenience – by enhancing user experience through ease of use and
of products and processes
 Confidence – by promoting integrity of systems, security of
operations and customer protection
 Convergence – by ensuring interoperability across service providers
 Cost – by making services cost effective for users as well as service
providers
Steps towards cashless economy
 Incentives for encouraging electronic payments.

 Direct benefit transfer of subsides through Aadhar card
integration.
 Mandatory use of PAN card in sale transactions of more than 1
lakh.
 Opening up of various payment banks across the country.
Various E-Payment Methods
 Payment banks
 Electronic Fund Transfer Systems
 Mobile Wallets
 Internet Banking (includes NEFT, RTGS, IMPS, ECS)
 Banking cards
 Banks pre-paid cards
 Point of sale
 Mobile Banking
Steps taken by RBI and Government
towards Cashless Transactions:
 On digital transactions up to rupees 2000, Service Tax of 15% waived off
 Digital purchase of fuel through credit cards, mobile wallets or e-
wallets, discount of 0.75%
 Free accident insurance worth rupees 10 lakh on account of online ticket
buyers
 On purchase of new LIC policies online via its site, 8% discount is
offered.
 Government has introduced various technologies like BHIM (Bharat
Interface for Money) app to transact between each other as well as with
other merchants.
Challenges in India for making a Cashless
Economy
 Transactions are mainly in cash
 ATM use is mainly for cash withdrawals and not for settling online
transactions
 Limited availability of point of sale terminals. (pos machines)
 Mobile Internet penetration remains weak in rural India
 Though bank accounts have been opened through Jan Dhan Yojana, most of
them are lying unoperational
 The low literacy rates in rural India & lack of infrastructure
 Since, India is dominated by small retailers; therefore they don’t have
enough resources to invest in electronic payment infrastructure.
Benefits of Cashless Economy
 Crub Black Money – Hawala transfers can’t be made without paper

currency.
o No Transaction can’t go unaccounted
o Crub Illegal trades
 Reduced Printing Cost – Cost of printing and reprinting of Billions of
notes in circulation.
 New Initiatives – Direct benifit transfer of Subsidies for LPG, fertilizers
and many more.
 Economic Growth.
 Way Forward.
 Time Saving
Difficulties and Disadvantages In Cashless
Economy
 No Privacy – Every Transaction is being recorded with Banks/Govt the
sense of a privacy of what we buy is lost.
 Security – A small loop hole in security could lead your or the entire
country’s money at Risk.
 Technical for Common Public – Only 1.6% indians have credit cards and
7% uses E-Wallets, with 65% population below 35 still the country’s Youth
is not tech savvy to understand digital India initiatives.
 Huge amount Investment –To make sure everyone could be a part of
Cashless Economy, Govt/RBI need to make sure even a small Tea Seller
have a basic Net connection, Debit/Credit/UPI Gear before he
commences his business.
 No Room For Uneducated.
 Overspending
THANKS

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CASHLESS

 There is a worldwide tremendous interest among policy makers,

 According to Moody’s Analytics study, greater usage of electronic card payment

“Building best of class payment and settlement systems for a ‘less-cash’

 Incentives for encouraging electronic payments.

 Crub Black Money – Hawala transfers can’t be made without paper

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