Page 1 of 9
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 05
May 2019
Available online: https://ejbss.org/ P a g e | 336
A Research Study on Cashless Economy
Dr. Nistha Sharma1 and Dr. Neelakshi Kaushik2
1Assistant Professor, Dept. of Commerce, C.T. Girls P.G. College
(Affiliated to Kumaun University, Nainital), Kashipur, Uttarakhand.
e-mail: dr.nisthasharma14@gmail.com
2PGT Commerce, Sai Public School (CBSE Affiliated), Kashipur, Uttarakhand.
e-mail: nk88.27@gmail.com
ABSTRACT
“Faceless, Paperless, Cashless” - A Digital Economy is an economy, where all types of
transactions are carried out through digital means. It includes internet banking, mobile
banking, debit and credit cards, POS machines, mobile wallets and UPI etc. The main
objective of this scheme is to make India digitally empowered in technology. It also makes
sure that the government services are accessible by the people electronically by improving
online infrastructure and internet connectivity. After demonetization and Digital India
initiatives, there has been a boost in electronic payments and transactions. On November 8th
,
2016, PM Narendra Modi put the entire nation in a frenzy. In one stroke, the government made
Rs 500 and Rs 1,000 denomination notes invalid. It was really a bold move considering the
fact that in India people are way too more dependent on cash. As per RBI, in FY 2016-17, the
volume of transactions through digital payment systems witnessed a 56% increase, with the
value of funds increasing by 24.8%. This paper steers the debate towards articulating an
appropriate way that can bring the Indian economy closer to become “cashless”. The paper
gives insights about the cashless economy benefits, identifying a set of core parameters that
shows a nation’s readiness to make it from being cash-based economy to cashless.
Keywords: Cashless Economy, Digital India, Cashless Transactions, Digital payments.
1. INTRODUCTION
Banks and payment gateways will soon follow the same approach for their cashless
transactions, and mobile will play a big role towards the Government of India’s “Cashless
India” initiative — a major step towards making India a digitally empowered and cashless
economy. In this economy, a third-party such as the government or a public/private sector
bank possesses an individual’s money and can circulate that money whenever it is not needed
by the individual.
Page 2 of 9
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 05
May 2019
Available online: https://ejbss.org/ P a g e | 337
Digital India Scheme- Digital India is the flagship programme of the Government of India.
It was launched on 1st July 2015 by Prime Minister Narendra Modi, with a vision to transform
India into a digitally empowered society and knowledge economy. “Faceless, Paperless,
Cashless” is one of the professed roles of Digital India. Major progress towards this goal was
made in late 2016, when the government took steps to demonetize the country. Now, even
small retailers and shop owners are using cashless models like Paytm for business
transactions.
Methods of Digital payments in India are as follows-
Banking cards
USSD (Unstructured Supplementary Service Data)
AEPS (Aadhaar Enabled Payment System)
UPI (Unified Payments Interface)
Mobile Wallets
Banks Pre-paid cards
Point of sale (POS)
Internet banking
Mobile banking
Micro ATMs
Merits of cashless economy-
Some of the merits of a cashless economy are listed below- 1. Elevation of the standard of India on the international stage as a digitally developed country.
2. It is more economical and helpful in saving nature as “paperless economy” means minimal
use of paper helping in saving trees.
3. It reduces problem of fake currency.
4. It boosts the economy because the cost of making and handling paper money is quite high.
5. Through the Digital India initiative, even the labourers are being paid their wages online,
which in helpful in reducing corruption. Wages are being paid directly to their banks account
under MGNREGA scheme.
Demerits of cashless economy in India are as follows- 1. Still India is lacking good internet infrastructure and hence fails to provide high speed internet
connectivity to perform digital transactions.
2. Cashless means dependency on cards and banks system connectivity.
3. Major part of Indian population is not illiterate about the functioning of banks systems and
online sources of making payments. They lack knowledge of internet.
4. Not everyone has smart phone to do all these things.
5. India is dominated by small retailers and they don’t have enough resources to invest in
electronic payments.
6. Increased hacking, cybercrimes and online banking frauds.
Page 3 of 9
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 05
May 2019
Available online: https://ejbss.org/ P a g e | 338
2. REVIEW OF LITERATURE
According to Alvares, Cliford (2009) in their reports ―The problem regarding fake
currency in India. It is said that the country's battle against fake currency is not getting easier
and many fakes go undetected. It is also stated that counterfeiters hitherto had restricted
printing facilities which made it easier to discover fakes.
According to a 2015 report by Price Water House Coopers, India’s unbanked population was
at 233 million. Even for people with access to banking, the ability to use their debit or credit
card is limited because there are only about 1.46 million points of sale which accept payments
through cards. A study by Boston Consulting Group and Google in July noted that wallet users
have already surpassed the number of mobile banking users and are three times the number of
credit card users.
Mandeep Kaur (2011), perception of cardholders and member establishments towards
plastic money in India is a study that examines the perspective of users as well as member
establishments has towards the use of plastic money. It focuses on some vital aspects like
challenges experienced by customers and bankers, value attribution to plastic-money
adaptation and some factors attracting them to adopt and use plastic money. It also analyses
the current status and trends of plastic money in India.
Bansi Patel and Urvi Amin (2012)in their research paper “Plastic Money : Roadway
Towards Cash Less Society” discussed that now days in any transaction Plastic money
becomes inevitable part of the transaction and with it life becomes more easy and development
would take better place and along with the plastic money it becomes possible that control the
money laundry and effective utilization of financial system would become possible which
would also helpful for tax legislation.
Nirmala. R. Sonu (2015): ANALYSIS OF THE USE OF PLASTIC MONEY
highlighted the advantage of instant transaction as one of the major factors favouring the use
of plastic money over real money by the population today. It has already been highlighted by
the study that convenience of not carrying cash and ease of transaction is one of the major
psychologically influencing factors that encourage the use of plastic money instead of real
money.
3. OBJECTIVES OF THE STUDY
Objectives of present study are as follows:
To know the concept of Cashless economy.
