Cash vs cashless economy

Cash vs cashless economy

• 1.
  Cash Economy vs Cashless Economy
• 2.
  Table of Contents •Cash economy • Advantages • Disadvantages • Demonetization effect • Survey • Cashless economy • Advantages • Disadvantages • Government launches • Conclusion
• 3.
  Cash Economy • Papermoney and coins • No electronic payments • Universally accepted • Hassle-free • No internet or fingerprint required • Only one wallet
• 4.
  • Before demonetization,86% cash in India was in the form of 1000 and 500 rupee notes. • It cost the central bank Rs.3917 crore to print Rs. 500 notes and Rs. 2000 crore to print Rs.1000 notes. • Manufacturing of coins cost a lot to government of India as the value of metal of one rupee coin is 70 paisa when melted, so more care is to be taken. • Total cost is approx. Rs.12 per transaction which included the cost of insurance and dispensing cash at ATMs. Notes Cost of printing(Rs) 2000 4.72 1000(old) 4.06 500(old) 3.58 50 1.80 20 1.50 5 0.50
• 5.
  Advantages • Interchangeability:- Cashis interchangeable. You don’t need a connection, an application or an account to exchange cash. • Merchant cost:- No merchant cost as merchant needs a working internet connection to accept digital payments .Before demonetization, on debit cards, they need to pay 0.75% per transaction below Rs.2000 and 1% for transaction above Rs. 2000. • Language compatibility:- As many of the apps don’t have an Indian language interface and there is a part of population in India which still isn’t able to read and write English language but physical notes are a visual medium of exchange.
• 6.
  Disadvantages • At anindividual level, cash is inconvenient to carry and manage. It cannot be traced or insured as cash once lost or stolen cannot be recovered. • Cash is expensive to print, inspect, move, store and guard. • Monitoring of tax compliance is difficult for the government. • Cash transactions are not trackable in nature, thus providing no transparency. This leads to corrupt practices and financial crimes. • Terrorism is strengthened due to infusing of fake currency.
• 7.
  Effect of Demonetizationon India • Cash collected by banks is Rs. 8,00,000 crore in November 2016. • Cash deposited in Jan Dhan accounts is Rs. 27,000 crore, average weekly deposits rose 3200% in two weeks since November 9 2016. • Before demonetization around 350 million debit card and 29 million credit card are in use. • Unable to find ways to change black money to white money, people let the ill-gotten wealth flow into rivers or burn/destroy old notes . • Bonanza for some; maids, servants, drivers etc. paid for up to six months in advance . • Both online and offline retailers can’t find customer due to shortage of notes.
• 8.
  Cashless Economy Boostedby Demonetization • NO CASH – scenario boosted cashless payments in last three months. • Paytm has touched a record 5 million transaction a day and is on the way to processes over USD 240 Billion. • Over 28,50,000 offline merchant across India accept paytm. • The highest increase in usage was seen in Chennai, followed by Ahmedabad, Hyderabad, Kolkata and Bangalore. • More than 8,00,000 merchants procured swipe machines.
• 9.
  Survey by Indian Express
• 10.
  Cashless Economy • Nopaper money or coins. • Everything is electronic. • Payment via E-wallets. • NEFT- National electronic fund transfer • EPS- Electronic payment system • Fingerprints • Smart cards/ microchips
• 11.
  Advantages • No needto carry cash. • Save from thieves:- Carrying a small card is enough. • Through e-payment, every single expense will be recorded in your bank statement or e-wallet. • E-payments also solve the problem of change. • Banks are likely to be in favor of cashless society as it saves them the cost of printing, inspecting, storing and guarding money. Cost also includes the security and labor involved in processing and transporting. • Monitoring of tax compliance is easy for the government.
• 12.
  Disadvantages • Only 34.8%of population has access to the internet (even after digital India campaign). • 392.2 million customers are still using 2G network because of which 6 out of 10 transactions fail due to low speed on 2G connectivity. • Only 90 million people have 4g mobile and LTE enabled. • Language compatibility:- Apart from a few companies, no e-commerce company tried going the Indian language way.There’s part of the population in India which still isn’t able to read and write, let alone being able to read and write in English. • Making digital payments is costlier either for the merchant or the customer or both. • Time taken for a transaction:- If you have driven through a toll boot and transaction is in process, then because of low connectivity there will be problems with both customer and the merchant.
• 13.
  Encouraging Cashless Transactions •Giving an indirect tax rebate for using cashless methods of payment which brings parity between cash and cashless. Even online, merchants can be incentivized to charge less for digital payments and more for cash on delivery. • Digital Payments businesses have tried their hand with cashbacks and lower rates for digital purchases have already encouraged digital payments. Incentives could be given to businesses which they can transfer to customers. • The government’s initiative to scrutinize large cash transactions and demand PAN cards and IDs will keep on discouraging cash transactions.
• 14.
  Launched by govt.to promote digital payment
• 15.
  • Cash mightbe more expensive for the government because of tax evasion, corruption and the need to keep recirculating old, spoilt currency and enabling transfers but digitalization is very expensive for citizens. What is happening here is a transfer of cost of money from government to citizens and a massive collection of data. • The idea to force people into adopting cashless payments is foolish and unnecessary. People are hurting and there are no means of meeting that demand in the near term. • The important thing is to give people choice and switch people to cashless gradually. Conclusion