Brought to you by
Promotional content

From cash to cashless – the India story

Our transition into a robust digital ecosystem can only be envisioned on the back of a solid telecommunications network.

By: HT Brand Studio

In November last year, when the government scrapped some 23.2 billion currency notes of Rs. 500 and Rs. 1,000 denominations, the aim was to curb corruption and counterfeit currency. The move pushed millions of new users into the fold of the digital economy.

From cash to cashless – the India story

Source: Pexels

It also brought the limelight squarely on various players in the digital payments ecosystem - mobile wallets, crypto-currencies, payment banks, the unified payment interface (UPI), and the Bharat Interface for Money (BHIM) app.

After demonetization, the total value of all transactions done electronically had risen to Rs105 trillion in December from Rs 95 trillion in November, according to the Reserve Bank of India (RBI), while digital payments company Paytm said it saw a three-times surge in new users. It had more than 14 million new accounts in November alone.

With the government's push for a cashless economy, and the ecosystem around digital payments building up, it might not be long before cashless transactions become more common. A 2016 study by the Boston Consulting Group (BCG) reported that the number of wallet users had surpassed the number of mobile banking users. It was also three times the number of credit card users. The report also projected that by 2020, the size of digital payments industry in India will be $500 billion; contributing 15% to India's GDP.

The challenges of going cashless

India is at a critical stage in its digital journey. It has seen industries like retail, transport and banking being disrupted by companies referred to as technological upstarts, which are huge businesses now. However, the ecosystem that can support a digital economy goes beyond the most apparent players like banks and e-wallets. It needs the government, and major technology and telecom companies to do their bit. A robust digital ecosystem can only be built on the back of a solid telecommunications network.

From cash to cashless – the India story

The benefits of going cashless, or moving from cash to plastic and digital payments are boundless. It's empowering and inclusive. Practically speaking, it makes transactions easy, and convenient, it will save you a trip to the bank or an ATM, and every penny will be accounted for.

In its report, 'Digital Finance for all', McKinsey writes: "We estimate that Indians lose more than $2 billion a year in forgone income simply because of the time it takes traveling to and from a bank."

In the current scenario however, cash is still king. Cash is used for more than 90 percent of India's total transactions, making it one of the most cash-centric economies. To make the shift to cashless will be rewarding, but arduous. It will not just be about making the big changes in policy, or infrastructure but also in mindset.

From cash to cashless – the India story

Source: Pexels

What lies ahead?

The first step on the journey is to upgrade the infrastructure to suit the needs of such an economy. For instance, at the end of July last year, India had a total of 1.44 million point of sale (POS) terminals installed by various banks, and 200,000 ATMs, according to RBI data. For a country the size of India, that's still not enough. POS penetration in rural areas is much lower, and needs improvement.

The state of access to smartphones and the Internet is not very promising either. Despite the fact that India has one of the largest smartphone populations in the world, the digital divide is vast. Only about 34.8% of Indians can access the Internet.

In terms of Internet speed, India is ranked 105th in the world when it comes to average Internet broadband speed. The average broadband speed is 4.1 Mbps, according to Akamai, the CDN services provider for media and software delivery. Even in urban areas, the time taken per transaction is high. It has to be a smooth experience for the user.

The government's Digital India campaign can solve that to an extent but it will be the tech and telecom giants who will play a significant role.

A big test will also be to get people accustomed to digital payments and build their trust. It's one thing to get people online but for them to acclimatise themselves to a digital life can take a while. Even the best educated people, have come to trust online payments only after years of using the Internet. Such experiences will have to be created for the vast population of the country. They need to start reimagining money as something, which is not necessarily tangible, but a value.

From cash to cashless – the India story

Source: Hindustan Times

Google's initiative that provides Wi-Fi at train stations in India is a good example. It is giving people access to fast Internet. More tech initiatives like this can be helpful in changing the digital payment landscape in India.

Security is another aspect that might be keeping people away from trying digital payments. In October last year, it was reported that there were fears of almost 3.2 million debit cards from banks including ICICI, Axis Bank, HDFC Bank, being compromised. The data protection and privacy laws in the country are inadequate.

For hackers around the world, data on millions of people is a goldmine. Apart from money frauds, people are prone to their personal information being stolen, or accounts being hacked and used for illegal purposes. Banks, wallet, and credit card companies will have to build robust security mechanisms that can safely hold the data of millions of customers.

The onus will be on the government, telecom and tech companies to come up with solutions for each of the unique problems that India faces in its path to being a cashless economy.

Topics

We are part of the very fabric of India and have helped build India's infrastructure

articles
Jul 12, 2017 17:18 IST

Digital Transformation - What Lies Ahead

One of the chief highlights at the Mint Digital Decoded Conference was the exclusive view into the upcoming innovations being developed and hosted by...

Technology
Jun 21, 2017 15:18 IST

"Innovative technology is at the heart of the fourth industrial revolution," says Vinod Kumar – MD, Tata Communications

Digital transformation is no longer a choice for most companies, as the emergence of new technologies continues to disrupt established business...

Technology
Unified Communications will lead the way to a collaborative future
Jun 19, 2017 15:18 IST

"We live in an era where data is the new oil"— Highlights from the Mint Digital Decoded conference

It's time for Indian companies to embrace unified communications if they want to stay abreast with the increasing needs of employees, customers, and their own business.

Cloud Computing
Unified Communications will lead the way to a collaborative future
Jun 12, 2017 15:18 IST

Unified Communications will lead the way to a collaborative future

: It's time for Indian companies to embrace unified communications if they want to stay abreast with the increasing needs of employees...

Unified Communications
First -- The Art of Managing Hybrid Cloud Security
Jun 09, 2017 16:18 IST

First -- The Art of Managing Hybrid Cloud Security

Data is growing at an unfathomable speed. Managing such massive volumes and variety of data is a huge challenge for any organisation..

Cloud Computing
Staying Ahead in A Vulnerable World
May 03, 2017 11:30 IST

Staying Ahead in A Vulnerable World

With an estimated economic impact of $400bn in 2016, it's no wonder that cyber security continues to be a core concern across the world.

cyber security
Guard up – Why we need to talk about data security
Apr 20, 2017 11:30 IST

Guard up – Why we need to talk about data security

As we get exceedingly reliant on digital information, our vulnerability to cyber attacks increases.

cyber security
Internet, cloud and mobility: Driving education innovation in India
Apr 12, 2017 11:30 IST

Internet, cloud and mobility: Driving education innovation in India

Until recently, many students in India grew up rummaging through books in libraries or seeking out the neighbourhood tuition teacher.

technology
From cash to cashless – the India story
Apr 10, 2017 11:30 IST

From cash to cashless – the India story

Our transition into a robust digital ecosystem can only be envisioned on the back of a solid telecommunications network.

Internet of Things
Smart cities – ushering India into the future
Apr 04, 2017 11:30 IST

Smart cities – ushering India into the future

The concept of smart city is experiencing a major revival in the country these days, with the government of India working towards creating 100 smart cities across the nation.

Internet of Things
The modern Indian workplace – how technology is changing work culture
Mar 31, 2017 16:05 IST

The modern Indian workplace – how technology is changing work culture

Enormous technological forces are radically altering the way we work. Disruptive innovations are creating new kinds of companies and business models every day...

technology
The Great Indian Entertainment Revolution
Jan 16, 2017 16:05 IST

The Great Indian Entertainment Revolution

The new face of the consumer is here. There is an excess of mass media and an array of platforms on which to experience it, leading to radical shifts in the consumption of entertainment.

Entertainment
Smartphone Connectivity Drives Social Change & Rural Empowerment
Jan 16, 2017 16:05 IST

Smartphone Connectivity Drives Social Change & Rural Empowerment

India is experiencing a digital revolution. The telecom sector is redefining technological transformation in India, with greater reach and penetration...

Cloud Computing
Dec 15, 2016 13:16 IST

Internet of Things: Virtual solutions to drive development in India

The inherent drive for innovation that the people of India possess could be the key to rapidly develop the nation using the latest technology in 'machine conversation': the Internet of Things.

Internet of Things
Dec 15, 2016 13:16 IST

The Next Big Leap: eGovernance pushes for transparency and efficiency

With the Government of India starting work on Digital India 2.0 project, we talk of how technology and the private sector will be leveraged in pulling...

E-Governance
Dec 15, 2016 13:16 IST

Next-generation Roaming and the Changing Face of the Telecom Industry

As pressure on consistent data services grows with LTE, operators need to look at better integration within local circles and overseas travel.

Data Roaming
Dec 15, 2016 13:16 IST

Beat information asymmetry with the latest in communication technologies

Tata Communications' and Skype for Business Unified Communication package helps businesses optimise as they spread geographically

Unified Communications
Dec 15, 2016 13:16 IST

The next 50 billion: will smart things break the Internet?

Did you know that there are around 1 billion WhatsApp users and more than 80 million Netflix users in the world, and that an average person spends around 4 hours on their mobile device every day? Figures...

Internet of Things
Dec 15, 2016 13:16 IST

Cloud computing: specialisation not generalisation

Some of you may have read UCLA Professor Jared Diamond's 1997 Pulitzer Prize-winning book, Guns, Germs, and Steel. In it, Diamond answers a question from Yali, his aboriginal New Guinean...

Cloud Computing
Dec 15, 2016 13:16 IST

The emerging middle

The digital, borderless economy is levelling the playing field between emerging and developed markets, accelerating innovation across industries and businesses of all sizes. The numbers speak for...

Digital Economy
The above content has not been created by any Mint journalist or editorial teams
More From Livemint

How to withstand a cyberattack

Collaboration: The key to the future workplace

The 10 commandments of digital transformation

Robots are after our jobs: what can we do?

Peek into the digital future