First of all I thank & grateful to the office bearers and managing committee of the chamber for giving me an opportunity to serve the chamber as Editor of News Letter.
In the repercussion of the cancellation of the legal tender character of old INR 500 and INR 1000 notes, India suddenly removed 86% of currency from circulation, without having an adequate supply of new notes ready to take their place is that fact, that India is more reliant on cash than almost any other country on earth. Suddenly, millions of people were left without the means to engage economically, to buy the things they wanted and needed, and myriad businesses were left without a readily available mechanism to receive payment for their goods, to buy supplies, or pay their staff.
But this surprise of demonetization also did something else: it pushed millions of new users onto the country’s digital economic grid. Ever since then there has been a surge in the digital transactions through use of credit/debit cards and mobile phone applications/e-wallets etc. To further accelerate this process, the Central Government has come out with various incentive packages and measures for promotion of digital and cashless economy in the country. Digital India is a programme initiated to prepare India for a knowledge future. The Digital India programme is a leading programme of the Government of India with a vision to transform India into a digitally empowered society and knowledge economy. “Faceless, Paperless, Cashless” is one of stated role of Digital India. As a part of promoting cashless transactions and converting India into less-cash society, various modes of digital payments are available such as Banking cards, USSD (the Unstructured Supplementary Service Data), AEPS (Aadhaar Enabled Payment System), UPI, Mobile wallets, Banks Pre-paid Cards, Points of Sale, Internet Banking, Mobile Banking and Micro ATMs.
India is headed for an exponential increase in digital payments over the next couple of years. The digital payments industry in Asia’s third-largest economy will grow by 10 times to touch $500 billion by 2020 and contribute 15% of GDP, as predicted by Google and Boston Consulting Group. Ever- increasing penetration of smartphones, the entry of several non-banking institutions offering payment services, consumer readiness to adopt digital payments, progressive changes in the regulatory framework will power the trend. The contribution of non-cash modes of payments, i.e. cheques, demand drafts, net-banking, credit/debit cards, mobile wallets and unified payment interface (UPI), is seen doubling to 40% of the consumer payments segment by 2020.
Non-cash transactions will exceed cash transactions in the economy by 2023. The trends should benefit a plethora of start-ups in the digital payment space as well as traditional banks, promote online commerce and boost financial inclusion in India. Online payments through digital wallets and debit/credit cards have been emerging as a preferred transaction mode over the past few years, mainly due to the ease of transaction, availability of smart phones and affordable Internet, and enhanced security and encryption methods, which led to greater confidence among customers
Moving towards cashless economy gives the advantages such as reduced cost of handling cash, induces transparency, helps curb creation of black money, will increase the tax base and add tot tax revenue. Coupled with this the added benefits of digital payments are, discount on fuel purchase, highway toll, insurance premium, services tax exemptions on plastic money