Are we ready for a cashless economy?
01 Dec 2016
In what is touted to be one of the most historical decisions made by the Government in recent times, Indian Prime Minister Narendra Modi made a bold decision on the night of 08 November 2016 – to scrap notes of INR 500 and 1000 denominations in an attempt to curb corruption and terrorism.
Within hours, thousands of rupees of currency became worthless. While the decision was met with overwhelming support from some sections of society, others remained wary of what many are calling a ‘brutal move’ that will only cause hardship to the common man.
But in all this flurry of the government’s decision, what most have failed to see is the calculated approach behind this initiative. Ever since inception, the Modi government has been hard at work to crack down on illegal activities related to fake currency notes.
Take for example the Pradhan Mantri Jan-Dhan Yojna, which aimed at creating bank accounts for the unbanked. Or the Unified Payment Interface, which allowed individuals to make payments under a single identifier, like an Aadhar number. Even the Income Disclosure Scheme, which allowed defaulters to willfully disclose their incomes, was a well-thought initiative by the Government toward financial inclusion.
With so many Government initiatives in place, the crackdown on black money is a huge blow to an economy that has relied on a cash-only model. But, there’s a positive side to this. The online mobile wallet community has great cause for celebration.
Withdrawal limits at ATMs have been reduced to INR 2,000 per day, and bank account withdrawals to INR 10,000 per day. Given that the economy relies greatly on cash transactions, this move is going to change the digital payment scenario in the country.
Experts say that just about 3-5% of transactions take place online, but not anymore. The ban will see a rise in digital transactions, leading to a strengthening of the credit process. With digital trails on each transaction, banks look forward to a future of clearer credit risk scoring. The online payment model makes the transaction history of each individual even more transparent.
With increased focus on financial inclusion, the Government’s decision has also speed-tracked the move to a Unified Payment Interface (UPI). This will not only facilitate the use of a single identifier, but also provide a much-needed boost to an economy where e-commerce and mobile wallets are on the rise.
So there you have it. A move that has taken the country by storm. Modi’s move to ban the INR 500 and 1,000 currency notes is not just a well-calculated move to ban black money, but also a blessing in disguise for the online payment industry.
At Wibmo, this is change that we have been waiting to embrace. With our online payment model designed to make our customers’ lives simpler, the Government ruling has put us on the forefront of this change to a cashless tomorrow.