As Indian government puts measures to have a cashless economy, the process won’t be as swift as it expects. Just like any other player in the digital payments arm, the State Bank of India has had its fair share of increase in tech-enabled services. On a daily basis, their e-wallet witnesses 70,000 to 80,000 download as opposed to the 6,000 to 7,000 downloads before demonetization was initiated. Under normal circumstances, their POS touchpoints transaction would total to Rs 95 crore per day. But in the post demonetization era, it amounts to Rs 450 corers, reports Your Story.
But even with the numbers showing a positive trend, SBI Chief Arundhati Bhattacharya thinks otherwise. She has chosen not to swing into the excitement everywhere that India will become a completely cashless economy.
Her unexpected comments were made at the Wharton India Economic Forum 2017 that was held in Mumbai.
Our cashless goals have numerous paradoxes
Arundhati said that she is not so sure that demonetization has been initiated at a premature time adding that “only history will tell.” She says that her opinion is India cannot be a cashless economy but rather a less-cash economy.
The SBI Chief says that for users who decide to go the digital way, they are exposed to unwarranted charges despite the government heavily promoting this new method of payment. “Transactions will become less costly, but only over a period of time. But it is valid that until that happens, people will question why they should switch to digital if it costs them money, and that will elongate the transition,” she explains.
Thus, moving from a cash-based economy to a cashless economy will be one hectic move due to the charges. This is because the cost advantage of the latter is cancelled out by the cost disadvantage of the former.
Via Forbes India
Age gap is one factor that will be effective in hindering the transition, says Arundhati. Considering that 75% of the population is under 25 years, getting the technology everywhere else will not that swift. The younger generation may be quick at picking up the technology but the remaining 25% may have some difficulties. Within them there must be some people who still prefer standing on a queue and physically watch their transaction.
But those are not the only problems likely to face the cashless economy, as we have explained below.
Number of citizens on mobile
Smartphones are not accessible to all Indians, forget about the net connections. On 31st July 2016, the Indian telecom regulator TRAI released data showing how deep rooted the problem is. India had a teledensity of 83%, with Bihar, Assam, Madhya Pradesh and Uttar Pradesh with teledensity of less than 70%, The Quint reports. For the urban dwellers, their access to mobile phones may not be that a problem. However, move to the rural area and you will realize that not close to a billion have mobile connections.
Reduced Internet Connection
Tech firms are ever working to improve the speed of internet connection from 3G+ to 4G+ and faster speeds in the future. But do they ever sit down to analyze how many people subscribed to their previous innovation? It seems they don’t considering only 149.75 million people were on broadband (3G + 4G + wireline broadband) and 192.9 million on “Narrowband” by the end of 2016.
To carry out these online transactions, one most definitely needs internet connection. However, from the look of things not all the population enjoys that.
As we have seen, access is the main issue that will impede transition into a cashless economy. However, other factors like charges will also be significant.