Silver Oak Academy

Bilari,Moradabad

Session 2021-22

Economics Project File

Cashless Economy
Submitted To- Submitted By-
Ms. Nazli Zehra Amaan Gul
XII 'B'
 1

Certificate
This is to certify that Amaan Gul of XIIth 'B' of
Silver Oak Academy has been Completed the
project file under my supervision. He has taken
proper care and shown utmost sincerity in the
completion of the project.

I certify that this project is up to my expectations

and as per the guidelines issued by CBSE.

Ms. Nazli Zehra

( Project Guide )
 Preface
As a part of CBSE Curriculam and in order to gain
some meaningful and sound practical knowledge on
our Given topic "Cashless Economy".
The main puropse of making this project is to go
around and research on our particular topic so that
we gain some kind of real life consice knowlege in
order to study in a meaningful and purposeful
manner.

In this project I Included various detailed study

about Cashless Economy in a well defined
manner.

With the help of this project we came across new

concepts and info that we are unaware of and have
been suffered it everyday. So this project help me in a
lot of ways.
 Acknowledgement
I would like to express my special thanks of gratitude
to my teacher Ms. Nazli Zehra maa’m our
commerce teacher as well as our principal Mr.
Kanchan Sir who gave me the golden opportunity
to do this wonderful project on the topic Cashless
Economy , which also helped me in doing a lot of
Research and i came to know about so many new
things I am really thankful to them.

Secondly i would also like to thank my parents and

friends who helped me a lot in finalizing this project
within the limited time frame.
 INTRODUCTION
There are various countries in the world which are going cashless.
They use non-cash payment for day-to-day consumption and
expenditure. The awareness about the non-cash method and
cashless societies are introduced here. There are various reasons in
which the country is to be digitalized. It has become necessary to
understand about the cashless economy and its feature as
nowadays our county India is also going to be digitalized due to the
increasing amount of black money.

Objectives
There are various countries in the world which are going cashless.
They use non-cash payment for day-to-day consumption and
expenditure. The awareness about the non-cash method and
cashless societies are introduced here. There are various reasons in
which the country is to be digitalized. It has become necessary to
understand about the cashless economy and its feature as
nowadays our county India is also going to be digitalized due to the
increasing amount of black money.
 NEED AND SIGNIFICANCE
Our country faced a huge money crisis as the old notes were
demonetized. During the time of demonetization the new notes
were available at the lowest rate, so many people tried to exchange
the product through the mobile banking system. People are
changing their trends and the government is imposing cashless
transaction into the country. So the need to understand about the
cashless economy is highly necessary.

Going cashless in India is a big transformation as people in rural

areas aren’t aware of the cashless way of transaction. So to study
and analyze the various way of the cashless economy is needed and
significant for me.
 The world is experiencing a rapid and increasing use
of digital methods of recording, managing and
exchanging money in commerce, investment and
daily life I many parts of the world and transaction
which would historically have been undertaken with
cash are often undertaken electronically. Some
countries now set limits on transaction and
transaction values for which non-electronic
payments may be legally used.

History
The trends toward the use of non-cash transaction
and settlement began in daily life during the 1990s,
when electronic banking become popular.

By 2010s digital payment methods were widespread

in many countries, with examples including
intermediaries such as PayPal, digital wallet systems
operated by companies like Apple, Contactless and
NFC payments by electronic cards and smartphones.

By 2010’s cash had become actively disfavoured in

some kinds of transaction which would historically
have been very ordinary to pay with physical tender,
and larger cash amounts were in some situation
treated with suspicion, due to versatility and ease of
use in money laundering and facing terrorism and
actively prohibited by some supplier and retailers to
point of coining the expansion of war on cash

By 2016 in the United Kingdom it was repeated that

in 1 in 7 people no longer carry or use cash. The 2016
United States user consumer survey study claim that
75% of respondents preferred a credit or debit card
as their payment method while only 11% of
respondent preferred cash..
By 2017 digital payment method such as venom and
square contribute to the cashless transaction. Venom
allows an individual to make direct payment to
another individual without having cash accessible.
Square is an innovation that allows primarily small
business to receive payments from their clients.
 CONCERNS

It has the potential to be helpful for central government and

economies, in the context of global negative inflation and
quantitative easing, and central control of the money supply. A
cashless society is convenient and fast; however, it also increases
ignorance of individual spending and vulnerability to fraud.
Consumer ignorance of spending increase as they are less aware
when swiping their card to complete a transaction that if they
budgeted their money and paid in cash. Their vulnerability to fraud
increases because the corporation keeps a record of credit and
debit cards transaction nut they don’t keep a record of a cash
transaction.
 Advantages
The advantages of a cashless society are:-
Efficient and convenient
Going digital, it helps to reduce the hassle of drawing cash or
making sure that cash-in-hand is sufficient to make a payment in
places where only cash payment is allowed. With a digitalized
payment system, it speeds up the process of financial transaction
and boosts the efficiency of the transaction.
Increased transparency
As monetary transactions are being made electronically, it
increases transparency as the financial transaction is recorded. The
cashless system will assist a wide range of institutions.
Government bodies
Rather than conducting costly and periodic surveys and sampling
of real-world transactions, real data collected on citizen’s spending
can assist in devising and implementing policies that are deduced
from actual data. With recorded financial transactions, the
Government can better track the movement of the money
through financial records which enables them to track the black
money and illegal transactions taking place in the country.
Easier tracking
As digital payments are made, transactions are kept in records.
Cashless payments facilitate the tracking of spending expenditure
and record the movement of money. Having recorded
transactions, it can help citizens to refine their budget more
efficiently.

Businesses
Cashless payments would
eliminate the fear of businesses receiving
counterfeit money and flush out illegal
cash. The risks of storing cash will
also be reduced as payments are
made digitally.
 disAdvantages
Disadvantages of the cashless economy are as follows:-

The issue of privacy

In a digitized economy, payment made will be traceable. With
traceable transactions, institutions would have potential access to
this information. With these digital traces left behind, digital
transactions become vulnerable. Such transactions allow
businesses a way to build a consumer’s personal profiles based on
their spending patterns. The issue of data mining also come into
place as countries head towards a cashless society.

Exclusion of certain population

Implementing a cashless system exclude the involvement of
certain population such as the poor or near poor and the older
generation. Heading towards a cashless society, citizens that do not
hold the power or knowledge of engaging in digital transactions a
re left behind. To be able to transact using e-payment, it requires
one to hold a bank account, which can hold their money. Many of
these impoverished people are underbanked.

Breaching/hacking of the system

When payment transactions are stored in servers, it increases the
risks of unauthorized breaches and hackers. Financial cyber
attacks and digital crimes also from a greater risk when going
cashless. These open transaction also create the dangers and
security issues where unauthorized access to users account occurs
and funds are transferred to another count or unauthorized
purchase are made by unknown users.

Privacy is the real concern

 VARIOUS NON-CASH PAYMENT
METHODS
The various non-cash payment includes

Debit card
A debit card is a plastic payment card that can be used instead of
cash when making a purchase. It is similar to a credit card but
unlike a credit card, the money comes directly from users bank a/c
while performing the transaction.

In many countries, the use of credit cards has become so

widespread that their volume has overtaken or entirely replace
cheque and in some instance, cash transaction. A number of
initiation have allowed debit cards issued in one country to be used
in other courtiers abs allowed their use for internet and phone
purchase.
Credit cards
A credit card is a payment card issued to users to enable, the
cardholder to pay a merchant for goods and services based on the
cardholder promise to the card issuer to pay them for the amount
so paid plus other agreed charges. Nowadays the volume of credit
cards has increased.

PayTM
Paytm is an Indian electronic payment and e-commerce brand out
of Delhi NCR, India launched it is the consumer brand of parent
one and communication. The name is an acronym for pay through
mobile. The company employs over 1,300 employees as of Jan
2017 and has 3 million of fine merchants across India. It also
operates the Paytm payment gateway and the Paytm wallet.
Mobile Banking
Mobile banking is a service by a bank or other financial transaction
remotely using a mobile device such as a phone or tablet. It uses
software provided by the financial institution for the purpose.
Mobile banking is usually available on a 24hour basis. Some
institution as it has some restriction which accounts may be
accessed through mobile banking as well as a limit on the amount
that can be transacted.

Charge Card
A charge card is a plastic card that
provides on an alternative to cash when
making purchases in which the issue and
the cars hold enter into an agreement that
the debt incurred as the charge account
will be paid in full and by the due date.
Prepaid or Stored Value Cash
Prepaid or stored value cash provides payment through a
monetary value held on the actual card or a deposit in an account.

Direct Debit or Direct Withdrawal

Direct debit or direct withdrawal is an instruction that a bank
account holder gives to his or her bank to collect an amount
directly from another account.

Bank Transfer
A bank transfer is a method of transferring money from one
person or institution to another. A wire transfer can be made from
one bank account to another bank account through a transfer of
cash at a cash office.
A bank wire transfer is often the most expedient method for
transferring funds between bank accounts. The transfer message is
sent via a server system utilizing IBAN and BIC codes.

A Giro Transfer
A giro transfer is a bank transfer payment when by the order is
given by the payee to his or her bank, which transfers the fund into
the payee’s bank account; the receiving bank, then notifies the
payee.

Online Banking E-Payment

It is similar to a giro transfer but is designed especially for use with
online commerce.

A Check/Cheque
It is a negotiable instrument instructing a financial institution to
pay a specific amount of a specified currency from a specified
amount to the person in whose name the cheque is issued.
 EFFECTS OF DEMONETISATION

 Against the backdrop of demonetization exercise that shoots up

the Indian economy last November, there is a major tussle brewing
in the consumer banking space in India.
 Demonetisation arguably the most important trigger of this
race, was an involuntary exercise that the country underwent
overnight. The two largest currency denominations the INR 1000
notes were declared along with the INR 500 notes were made
unvalued. Also, new INR 500 and INR 2000 came into existence as
valued by the RBI.
 The printing of the new currency was begun only a month
before the declaration but the demand for the new currency
shipped the supply leading to daily cash shortage at the bank and
ATM.
 The various payment basics offer interesting competition of
traditional banks because of the profits of the company that have
received their licenses. Two such promised licenses are Indian
telecom service and the e-wallet online payment facilitating for
payTM.
 The government efforts to encourage people to enter the
banking system through small instruments that don’t solve
systematic issues. Among these issues, the fact is that the people
needs can happen easily, for reason that includes not having
reached a tipping point. In terms of moving a critical man of
people in the banking system that would make non-cash
transaction an alternative.
 ROLE OF RBI
1. Pay TM, debit card, credit card, wallet are some noncash
payment methods introduced by the RBI.
2. The RBI ordered the shops to make arrangements for receiving
the amount through the noncash payment method
3. Introduced mobile banking to everyone including farmers
4. Promotion of e-commerce by liberating the FDL norms for
this sector.
5. RBI has issued certain guidelines that allow the user to increase
their digital currency limit to rs1,00,000 based on KYC
verification.
6. The government has launched a UPI, a digital currency which
makes electric transaction much simple and faster.
7. Licensing of payment banks. The government in promoting e-
wallet. It allows instantly to send money, pay bills, recharge mobile
both offline and online.
8. The RBI is offering more incentive for the digital transaction
and after demonetization, there has been a marginal increase in the
percentage of the digital transaction.
 COUNTRIES GOING CASHLESS
1. Belgium, France, Canada are some of the countries which
follow the aspect os cashless economy more than the other
countries. In the above-listed countries, about 90 of the people use
the digital transaction method for their daily purpose.

UK, Sweden, Australia, Netherlands, US also have a high rate of

the digital transaction taking place but most people prefer cash for
their day to day purpose.

Our country, India as a developing country has adopted the

measure of the cashless economy but due to its diversity, it is
logging.
 making india a cashless
economy

The government is working at various levels to

reduce the dependence on cash
Even as ordinary citizens queue up for cash and economists are
busy estimating the extent to which economic growth will be hit
because of the ongoing drive to replace high-value banknotes,
there has been a lot of discussion on whether the government can
use the current situation to push India towards a cashless future. In
his radio address on Sunday, Prime Minister Narendra Modi once
again pitched for creating a cashless society.
Reducing Indian economy’s dependence on cash is desirable for a
variety of reasons. India has one of the highest cash to gross
domestic product ratios in the word, and lubricating economic
 According to a 2014 study by Tufts University, The Cost Of Cash
In India, cash operations cost the Reserve Bank of India (RBI) and
commercial banks about Rs21,000 crore annually. Also, a shift
away from cash will make it more difficult for tax evaders to hide
their income, a substantial benefit in a country that is fiscally
constrained.

To be sure, the government on its part is working at various levels

to reduce the dependence on cash. Opening bank accounts for the
unbanked under the and adoption of direct benefit transfer is part
of the overall idea to reduce usage of cash and increase
transparency.

RBI has also issued licences to open new-age small finance banks
and payments banks which are expected to give a push to financial
inclusion and bring innovative banking solutions. Things are also
falling in place in terms of technology for India. The recently
launched Unified Payments Interface by National Payments
Corporation of India makes digital transactions as simple as
sending a text message.

So, will the exercise to exchange currency notes and the ongoing
currency crunch be a decisive factor in making India a truly
cashless economy? Nandan Nilekani, in an interview to this
newspaper, termed this as “a defining point in India moving to
cashless". Shortage of cash has significantly increased the use of
digital modes of payment, but the actual shift will only be visible
after the cash crunch eases. It is possible that a section of people
which has used electronic mode of payment for the first time due
to the cash crunch will continue to transact through this medium,
but there are still a number of hurdles in making India a cashless
economy.
First, a large part of the population is still outside the banking net
and not in a position to reduce its dependence on cash. According
to a 2015 report by PricewaterhouseCoopers, India’s unbanked
population was at 233 million. Even for people with access to
banking, the ability to use their debit or credit card is limited
because there are only about 1.46 million points of sale which
accept payments through cards.

Second, about 90% of the workforce, which produces nearly half

of the output in the country, works in the unorganized sector. It
will not be easy for the informal sector to become cashless, and
this part of the economy is likely to be affected the most because
of the ongoing currency swap. Third, there is a general preference
for cash transactions in India. Merchants prefer not to keep
records in order to avoid paying taxes and buyers find cash
payments more convenient. Although cashless transactions have
gone up in recent times, a meaningful transition will depend on a
number of things such as awareness, technological developments
and government intervention. For instance, mobile wallets have
seen notable traction, and it is possible that a large number of
Indians will move straight from cash to mobile wallets.
A study by Boston Consulting Group and Google in July noted
that wallet users have already surpassed the number of mobile
banking users and are three times the number of credit card users.

However, as noted above, a material transition to a cashless

economy will depend on a number of factors. First, the availability
and quality of telecom network will play an important role.
Presently, people face difficulties in making electronic payments
even in metro cities because of poor network. Second, as one of
the biggest beneficiaries of this transition, banks and related
service providers will have to constantly invest in technology in
order to improve security and ease of transaction. People will only
shift when it’s easier, certain and safe to make cashless
transactions. Third, the government will also need to play its part.
It will have to find ways to incentivize cashless transactions and
discourage cash payments. Implementation of the goods and
services tax, for example, should encourage businesses to go
cashless. Government should also use this opportunity to revamp
the tax administration, as more than taxes, small businesses fear
tax inspectors.
The government will have to create conditions—not necessarily
by creating cash shortages—to push cashless transactions to a
threshold level after which the network effect will take over. India
may not become a cashless economy in the foreseeable future, but
it needs to reduce its unusually high dependence on cash to bring
in much needed transparency and efficiency in the system.
 FINDING
Analyzing this project, I could understand the uses of the cashless
economy in various countries, and about the digital aspect of a
cashless economy.

 I could understand why and how the noncash method is

adopted.
 A cashless economy is an innovation method for keeping
countries wealth safe.
 Black money and corruption will be badly affected by
introducing a cashless economy.
 The government can collect their taxes correctly.
 There will be less no. Of frauds compared to cash transaction in
the digital transaction.
 39

Bibliography
 INVESTOPEDIA
 www.forbes.com
 Wikipedia – a digital currency
 Wikipedia – the cashless economy
 Cashless – Society.ORG
 The economist
 The Hindu
 The Mint