Being Cash Less - The road to digital currency
Being cashless is the buzzword going round in all strategy meetings now . It is surprising to see the speed at which this term has taken center stage . India seemed to have survived one of it's biggest scare of having to live with out 1000 and 500 Re notes . Suddenly, it has become strategic for us to think, conceptualize and transform in to a cashless economy. No one get jitters about having to manage collections, business disruptions and customer complaints because of their inability to accept cash any longer. In-fact it is turning out to be the other way around. It becomes very difficult to run the show if you cant accept digital currency. Being cash less is the new normal! Here are a few points that are to be addressed immediately to make this journey smoother
- Clarity on transaction costs that are to be incurred and who will bear this ?
- How will the data that is newly available be used / protected from being misused
- Risk management aspects - How the security threats are managed ?
- Accountability by Payment service providers - Who will compensate the customer in the event of a loss due to technology / process gap
- Inter-operable payment systems - How will customer and merchants have a seamless payments experience ?
Union budget 2017 has come out with guidelines on limiting cash transactions to sub 3 lacs and also had put restrictions on donations in cash format . Banks have started charging on deposits and withdrawals in cash form . While there are a host of such measures aimed at improving digital currency , the distance to cover is still long. In reality for business models to manage this transition in to digital currency needs heavy investment in their existing payment infrastructure. Especially for those small and micro financial institutions whose customers are used to physical cash . Disbursal is relatively easier task compared to collections . For the collections to be cashless , customers of these institutions will have to convert their income in to digital currency . Given with the barriers to access banking and transaction limits for this segment there will have to additional effort in doing so .
One thing is clear . The administration is determined to make digital payments a reality for India's rural population. The change is happening steady but would need a lot more active participation from other regulatory agencies and private industry participants. One immediate area of essential reform would be to look at regulations that stipulate papers and signatures on hard copies . There is still a large number of utility payments administered by local government bodies that accept only cash . Highway tolls and airport parking fees are still collected in cash . Traffic penalties in many cities continue to be accepted only in cash. Court fees , Registration Stamp duty , are few examples of high value cash transactions that cant be avoided . One can only hope that transformation in these areas will happen at the pace envisaged by government and the need for cash will be eventually eliminated for common man .
Ultimately the benefits from a cashless economy is immense . There is efficiency that could be attained across various aspects of government revenue and spending . Apart from monetary benefits , this also would bring in better transparency and accountability in to our communities . It is encouraging to see the progress made thus far . Hopefully Government , regulator , Industry participants and the general public will all play their part effectively and make this a reality soon.
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Ps: Views expressed are personal and not intended to be a formal point of view from my employer.