Thanks to digital or cashless payments, gone are the days when we struggled to find change coins in our purses and pockets or argued with a taxi driver about the lack of change money, or wasting precious time finding an ATM because the shopkeeper won’t accept a dime less, or giving Rs. 600 for something that costs Rs. 599 in a mall and simply saying “keep the change” because some of us are embarrassed to rightfully take back that one rupee. No more do we have to go to the bank and shuffle between various counters seeking information on NEFTs or stand in long lines to deposit cash. With digital payments, transactions simply happen between two bank accounts. Although internet banking was started long back in India, paying online or making digital payments for groceries, movie tickets, airline tickets through various apps providing various incentives is a recent development.
Basically, payments have become fairer and quicker with digital payments. One can very easily say that we are in the digital age. When it comes to payments, the digital age could not have made it easier for people to make hassle-free money transfers and payments. In urban India, digital payments or going cashless is a boon, Right from no cash hassles to getting attractive coupons and cashback offers, urban India thrives on digital payments. We cannot imagine life without apps such as PayTM, Google Pay, Phone Pe etc. anymore. Even small businesses to unorganized businesses such as vegetable sellers are digital-payment aware and make full use of digital payments gateways.
Rural India’s Climb to Mount Digital
However, the story in rural India is different. Rural India’s digital story is still developing. Although it is currently behind countries like China, thanks to the commitment of the government and other state and non-state actors, rural India has made giant leaps in digital technology overall.
According to Anurag Gupta, in his article Digital Payments in India: Challenges and Opportunities, for The Entrepreneur, the number of digital transactions increased in India from INR 220 crore in 2013-14 to over INR 2,000 crore in 2017-18. He attributes this massive growth to the development of digital payment gateways like the UPI (Unified Payment Interface). UPI recorded “over 3 billion transactions last year with 620 million transactions worth INR 1 Lakh Crore in December alone (Digital Payments in India: Challenges and Opportunities, 2019).”
Apps such as BHIM UPI, launched by the Government of India have very recently also successfully integrated with privately-owned apps such as PayTM and Phone Pe giving Indian users a wide variety of cashless payment options.
Benefits of Going Cashless
- Cashless payments ensure transparency. Digital payments significantly reduce the possibility of cheating and help maintain a verifiable record
- It also helps in tax evasion and is helpful in tracking illegal payments
- Customer service on digital payment platforms is prompt and effective
- Convenience in payments, quick transactions save time and resources
- Business progresses faster
- People are motivated to open bank accounts and this helps them to enter the financial inclusion framework
- Users digital payment apps are motivated by incentives such as cashback offers and deals.
Challenges to Realize India’s Digital Dream
Overall, progress has been made in India with respect to digital payments but, substantial progress still remains to be made. Challenges such threats to Indian cybersecurity, low and erratic internet connectivity in several parts of rural India and high charges for digital transactions are hampering India’s path to go fully digital.
However, despite challenges, the prospects of digital growth look optimistic because progress in digital connectivity is making tremendous progress with global tech giants like Google expanding its services in India. These are in tandem with the Govt. of India’s vision of a Digital India of which rural India is an integral part. Research shows that “the Indian digital payment industry is expected to reach $1 trillion by 2023. (Digital Payments in India: Challenges and Opportunities, 2019).
It will be interesting to see how India addresses these challenges and makes steady progress with respect to the number of digital transactions in the years to come. With a growing population and its growing needs, it is crucial for India to get upto speed with its digital capabilities.