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Cashless Economy: Boon or Bane
A cashless economy is an economic state whereby financial transactions are not conducted through money in the form of paper currency which includes physical banknotes or coins, but rather through electronic channels such as direct debit, credit cards, debit cards, electronic clearing, and payment systems such as Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) in India. The utmost digitalization has affected every person and as a result India is moving towards a cashless economy in order to minimise the dependency on paper currency.
Looking at the brighter side there are various advantages of going cashless and the most significant ones are that people are neither required to carry bulky wallets in their pockets nor there is any need to be kept waiting in the long queues of banks for withdrawing money. The smartphones today have e-wallets processed in them which can be used for making payments electronically. Importance of using smartphones for adopting cashless economy in the country can never be ignored as India is the second largest market for Smartphone buyers in the world. The main advantage of a cashless society is that a record of all economic transactions through electronic means makes it almost impossible to sustain black economies or underground markets that often prove damaging to national economies. Credit cards and debit cards reduces our need to depend on paper currency by aiding us to withdraw cash through our nearby ATM machines and also making the payment system easier either online through digital gateways or offline at any vendor shopkeeper using POS devices. Digital transactions are convenient and improves market efficiency. It will eliminate the risks associated with carrying and transporting huge amounts of cash
The major drawback of adopting cashless economy is that illiterate people do not know how to make digital transactions correctly even though they know how to use smartphones. Since the knowledge of digital transaction is not common among people and is limited to Urban centres mostly, makes it difficult to implement cashless modes. The poverty and illiteracy are some of the factors behind people facing difficulty to use these technologies. Also on the other end as we all know that every technology has its pros and cons and no system on the internet is completely secure, hence the risk which is involved in digital transaction is lofty because the rising cyber frauds and hacking of bank accounts is common these days. Lack of adequate infrastructure is a major hurdle in setting up a cashless economy. Inefficient banking systems, poor digital infrastructure, poor internet connectivity, lack of robust digital payment interface and poor penetration of PoS terminals are some of the issues that need to be overcome. Spreading financial literacy and awareness about digital mode of payments among illiterate people is supremely important in the rural regions of India to make cashless economy a reality and achieve financial inclusion.