Assessment of the progress of digitisation from cash to electronic
India is taking some eventful steps for the sake of the economy and with the help of revolution. One such measure is shifting to cashless transactions. Since the late 20th century, Indian citizens have been going cashless. Through the usage of ATMs, MICR, debit cards, and credit cards, the mode of transaction is changing.
India Stack, an effective initiative from the government of India has opened new doors for its citizens. For instance, Indian citizens can now pay via mobile wallets, recharge coupons, UPI, NFC, QR codes, and other methods.
Indian businesses can effectively process (receive and send) their payments using e-Sign. We will know the Assessment of the progress of digitisation from cash to electronic here:
Measure of Cash
There is no accurate estimate of the cash payments. But, there are two critical indicators through which you can measure cash payments. They are:
- The value of Currency in Circulation (CIC) versus Gross Domestic Product (GDP)
- The value of ATM withdrawals across the country
The Value of Currency in Circulation (CIC) versus Gross Domestic Product (GDP)
Cash is used as a payment method. It affects the quantity of CIC because it is one of the main factors that drive demand for currency.
Over the past 5 years, the CIC increased at a Compounded Annual Growth Rate (CAGR) of 10.2% across the country.
High CIC shows that cash is preferred as a payment instrument. Based on this statement, India continues to have a strong inclination toward cash payments.
The value of ATM withdrawals
We can store cash. We can use it as a form of payment. The high-value cash is stored as a value. In contrast, low-denomination cash is for payments.
The demand for high-value currency has outperformed low-value currency during the last five years. This is a sign that people are going cashless for making payments and more than a way to hold wealth.
Estimates of Cash Payments
Some surveys have tried to count the number of cash payments. Few of them provided indications of cash usage and digitization in the country. The estimates prove that cash is superior in India and many other jurisdictions. However, online payments are rapidly growing.
According to these reports, the use of digital payments is rising in the Asia Pacific region. The region’s e-commerce market is predicted to grow at a CAGR of 12 percent between 2016 and 2021, with India serving as one of the major contributors.
Digital Payment Enablers
The rapid growth in mobile and the internet allows banks and non-bank providers to offer payment services using mobile as both an access device and a channel. SMS, mobile applications, USSD (Unstructured Supplementary Services Data), and banks are mainly offering mobile banking services.
The increasing number of Android phones has accelerated digital payments. With the rise in 3G and 4G spectrum, the internet network is expanding across the country, even in remote areas. The “Digital Revolution” was built on this basis.
India has witnessed sharp growth in digital transactions during the time of the COVID-19 pandemic. In a year, the transaction rises almost to the tune of 48 billion.
Progress in Digitisation
Digital payments are not like cash which can’t be measured out. It can be calculated. Online payments in India have witnessed a CAGR of 61% and 19% in terms of volume and value. This shows that country is inclined towards digital payment.
Some factors related to progress in Digitisation are:
- Growth of Digital Payments
- Digital Payments to GDP
Inhibitors of Digital payments
The factors inhibiting digital payments are as follows:
- Inadequate acceptance infrastructure
- Connectivity issues
- Substitute for payment methods
- Security and privacy are a priority
- Lack of getting complaints resolved
Tips to make your Digital Payment safe
Don’t save the card details
Avoid saving the details of your debit, or credit card when you make an online purchase. Many of us save the details for the future but erasing is best.
Use a private window for transactions
Don’t rely on any kind of suspicious apps and websites. Always use official apps suggested in the app store. Always, log out from the page once you have completed the transactions.
Don’t share a password
Avoid public computers/WiFi networks
Avoid using public devices or WiFi networks while making online transactions. They are more prone to cyber-attacks, fraud, and theft activities. Use only reputed and verified websites. Trusted websites guarantee a higher level of security.
Be aware of Fraud Apps
Play Store and App Store contain many illegal apps. Be aware of these apps. You can identify them with the help of negative reviews, and a low number of downloads. Fraud apps lack in ‘verified’ badge
Measures to improve digital payments
Some practical ways to improve digital payments are:
Offers for customer
You can maintain a customer base by offering customers an online rewards scheme such as cashback. This will attract new customers also.
Embrace digital ability to cover a range of transactions
You can track the status when you are sending or receiving money electronically. As a result, you can save time. Suppose, you are running a grocery shop. Instead of doing manual payments like cash refunds and cheques, you can go for online payment.
An additional layer of security
While making online payments our first concern is security. According to research, it is said that 62% of people are concerned about scams. This has led to 58% of people feeling uneasy when entering their bank details to pay online money. It is essential to implement security measures like encryption.
Create a faster user experience
When making online payments, the customer’s main priority is efficiency. Businesses need to provide reliable, secure, and, quick service to their customers.
Both modes of payment, whether online or offline, have some needs and limitations. However, online payment is much better than cash payment. Online payment is transparent, secure, safe, and convenient. That’s why India is moving toward virtual payments.