Cash to Cashless Economy in India: Importance and Challenge

Cashless economy is one where electronic channels like debit card, credit card, electronic merchants, payment mode like NEFT, RTGS, IMPS are used for transaction due to minimum use of physical cash. As the high denomination currency notes make about 85 per cent of the total cash circulated in India so cash is like water a basic necessity without which survival of Indian is a challenge. Despite introduction of e-banking channels like internet banking, mobile banking, NEFT, RTGS Indians are dependent on cash transactions which is 97-98 per cent of all transaction and in 2015, 233 million Indian were unbanked and government announced Pradhan Mantri Jan DhanYojana to make it easy for people to open new account. Despite all these efforts, 40 per cent of the Indian population is unbanked or ―outside the ambit of formal banking‖. Secondly, 75 per cent transaction of Indians was cash based while only 20-25 per cent transaction of developed nations like US, Japan, France, and Germany was in cash. The main reason of cash based economy are less acceptance of cash by small shopkeepers like kirana stores, existence of corruption and black money and tax evaders, Then as on Nov. 8, 2016, Prime Minister Narender Modi announced the demonetization and scrapped the use of 500 and 1000 rupee note to push Indian towards cashless economy.

REVIEW OF LITERATURE:

Ramya et.al (2017) studied about ―cashless transaction: modes, advantages and disadvantages‖. It highlights that RBI is taking several steps to encourage payment and settlement facilities for making less cash saving. Digital transaction bring in better transparency, scalability and accountability. It also shows that convenience, discount, tracking records, budget discipline, and lower risk, small gains are advantages of cashless transaction. Higher risk, difficult for un-tech savvy and overspending are disadvantages of cashless transaction. Garg and Panchal (2017) studied about ―Introduction of cashless economy in India 2016: benefits and challenges‖. For this study, data has been collected from Delhi region and analyzed by percentage. Response shows that cashless economy helps in curbing black money, counterfeits fake currency, fighting against terrorism, reduce cash related robbery, helps in improving economic growth of our country. Major hindrances are illiteracy rate, attitude of people and lack of efficiency in digital payment. Deepika kumara (2016) studied about ―cashless transaction: methods, applications and challenges.‖ This paper highlights that authentication of user is also a big challenge for cashless transaction and generally multilevel authentication, token based authentication and biometric authentication method are used for security of cashless transaction. So hacking is major issue for cashless transaction which should be resolved. Akinola (2012) studied about ―cashless society, problems and prospects, data mining potentials. Through data mining, a model for extracting knowledge from transaction data is prepared. It shows that firstly transaction data are extracted from

of data mining result is used by government and financial houses for effective management and administration.

1. To know the modes of Cashless Transaction. 2. Importance and challenges of cashless economy. 3. Analyze the future trend of cashless economy.

The study is based on secondary sources of data/ information. Different books, journals, newspapers and relevant websites have been consulted in order to make the study an effective one. The study attempts to examine the modes and Importance of Cashless Transaction in India.

5. Digital Wallets: E-Wallet is mobile based application which can be downloaded from app store and can be assessed through mobile phones. Currently HDFC, ICICI, SBI and Axis bank have launched their e-wallets app like Buddy, Lime, Payzapp. Paytm,

8. Aadhar Enables Payment System: By linking aadhar card to bank account, you can do payment at merchant store with a finger scanner at the merchant store but used for micro payment not more than Rs. 4000. Other E-Banking channels are internet banking, mobile banking and telephone banking,

2. Increase in Tax Revenue: Due to of electronic receipts and payments, a detailed record transactions done by small merchants, professional will be available so many more people will come under the preview of tax which will reduce tax avoidance and money laundering. So government tax revenue increase will benefit society at large. 3. Decrease in Corruption and Black Money: Increase in digital transaction will curb generation of black money and reduce corruption. The modus operation for corruption is cash but if bribe will be paid through bank account then every detail of bank account will be checked by income tax department so bribe at large will be reduce. Payment to corrupt official through e-wallet is not possible and unaccountable political funding will also reduce.

1. Cash driven Economy: Nearly 97-98 per cent transactions takes place in cash. About 90 per cent workforce in unorganized sector, who produces nearly half of the output in the country prefers cash based transactions so cashless of this sector is not easy.

4. Lack of Infrastructure: For promoting cashless transactions, proper infrastructure is required like there are 1.44 million POS terminals installed by various banks. Up-to July 2016, as per RBI report, swipe machines are not available on mostly retailers shop. Mostly banks are lacking in adoption of technology because of which customer‘s service is not up-to mark. 5. Lack of Internet Usage Facilities: As per report from ―internet and mobile association of India and market research‖ internet users in India is 450 million. So internet penetration in India is currently 31 per cent. But in urban India out of 444 million population, 269 million Indian are using internet. But in rural India, out of 906 million, only 163 million are internet users, so 750 million people in rural access to internet cashless transaction cannot be done. So easy access to internet in rural area can increase the usage rate of internet.

8. Insecurity: Distrust in digital transaction is also a reason for not using e-banking. Hacking of ATMs, loss of personal information, data breaching in internet banking are main insecurity reason so stringent policy and provision should be made by government and RBI. There will be a need for competent encryption technologies at physical POS for reducing cybercrime.

The payment industry in that one keeps on growing with the ever changing consumer attitudes and the needs of the businesses. A revolution in this area is a continuous process. Cash less transaction increasing day by day.

However, the profits of this move have now started filtering in with more and more people switching to digital modes of accepting and making payment. India is progressively transitioning from a cash-centric to cashless economy. Digital transactions are observable, therefore easily taxable, leaving no room for the circulation of black money. The whole country is go through the process of modernization in money transactions, with e-payment services gaining unmatched momentum. A large number of businesses, even street vendors, are now accepting

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Research Scholar, Department of Commerce, M.D.U., Rohtak