ECONOMICS

ASSIGNMENT
TOPIC:
CASHLESS ECONOMY

INDEX:
 INTRODUCTION
 NEED AND SIGNIFICANCE
 CASHLESS ECONOMY
 HISTORY
 CONCERNS
  VARIOUS NON-CASH PAYMENT
METHODS
 EFFECTS OF DEMONETISATION
 ROLE OF RBI
 COUNTRIES GOING CASHLESS
 MAKING INDIA A CASHLESS
ECONOMY
 FINDING
 QUESTIONNARIE

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.

NEED AND SIGNIFICANCES:

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.

CASHLESS ECONOMY:
A cashless society describes the economic state
whereby financial transactions are not concluded with
money in the form of physical banknotes or coins, but
rather through the transfer of digital information
through the transaction parties. Cashless societies have
existed, based on barter and other methods of exchange
and cashless transaction have also become possible
using digital currencies such as bitcoin. However this
article discusses and focuses on the term "cashless
society" in the sense of a move toward, and
implications of, a society where cash is replaced by its
digital equivalent in other words, legal tender [money]
exists, is recorded and exchanges only in digital form.
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
• 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
• 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 are 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.

VARIOUS NON-CASH PAYMENT METHODS

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 DEMONETAISATION
• 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

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 b due to its
diversity, it is logging.
 MAKING INDIA A CASHLESS
ECONOMY
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 asy 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.
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.

1. I could understand why and how the noncash method

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

SURVEY
1. What is the main advantage of a cashless economy?

A) Faster transactions

B) Higher interest rates

C) More physical cash to carry

D) Limited financial tracking

2. Which of the following is a cashless payment

method?

A) Coins

B) Credit card

C) Paper currency

D) Piggy bank

3. How does a cashless economy contribute to financial transparency?

A) By increasing corruption

B) By reducing tracking of transactions

C) By making transactions more traceable

D) By promoting cash hoarding

4. What is a potential challenge of transitioning to a cashless economy?

A) Increased cybersecurity risks

B) Less convenience in transactions

C) Lower transaction fees

D) Limited access to financial services

5. Who can play a role in promoting the adoption of cashless transactions?

A) Only individuals

B) Only businesses

C) Only government

D) Individuals, businesses, and government

6. Which technology is commonly used for cashless payments?

A) Morse code
 B) Blockchain

C) Carrier pigeons

D) Smoke signals

7. What factor is essential for the success of a cashless economy?

A) High inflation rates

B) Stable internet connectivity

C) Limited access to banks

D) Cash-only transactions

8. How does a cashless economy impact financial inclusion?

A) Increases barriers to access financial services

B) Decreases access to credit

C) Improves access to banking for underserved populations

D) Promotes informal lending practices

9. What is the role of mobile wallets in a cashless economy?

A) They are used for storing physical cash

B) They facilitate electronic payments

C) They are only accepted in certain regions

D) They have no impact on cashless transactions

10. How can governments encourage the adoption of cashless transactions?

A) By banning all cash transactions

B) By providing incentives for cashless payments

C) By increasing cash circulation

D) By limiting access to digital payment methods

Here are some survey questions with options related to a cashless economy:

11. How comfortable are you with the idea of a cashless economy?

a) Very comfortable - I already use digital payments frequently.

b) Somewhat comfortable - I'm willing to adapt to a cashless system.

c) Neutral - I'm not sure about the benefits and drawbacks.

d) Somewhat uncomfortable - I prefer using cash for certain transactions.

e) Very uncomfortable - I rely heavily on cash and don't want to change.

12. Which of the following digital payment methods do you use most frequently?

a) Mobile wallets (e.g., Apple Pay, Google Pay)

b) Contactless credit/debit cards

c) Online banking apps

d) Cryptocurrencies (e.g., Bitcoin, Ethereum)

e) Other (please specify)

13. What motivates you to use digital payments? (Select all that apply)

a) Convenience and speed

b) Rewards and cashback offers

c) Security and reduced risk of theft

d) Environmental concerns (reducing paper waste)

e) Other (please specify)

14. What concerns you most about a cashless economy? (Select one)

a) Privacy and data security risks

b) Technical issues and downtime

c) Inequality and exclusion of underserved populations

d) Dependence on internet connectivity

e) Other (please specify)

15. How important is it for you to have the option to use cash in transactions?

a) Very important - I want to always have the option to use cash.

b) Somewhat important - I prefer cash for certain transactions.

c) Not very important - I'm comfortable with digital payments.

d) Not at all important - I never use cash.