CASHLESS ECONOMY AND MOBILE PAYMENT
In India most of the transactions are physical, only 5% or less of it is done through electronic. The transactions that are done with the help of cards and digital means (electronic) are called Cashless transactions. The economy that implements Cashless transactions is called Cashless Economy. According to the 2016 budget, India is aiming to become a Cashless Economy, to prevent the flow of black money. Now in India only less than 5% of all payments happen electronically and also number of currency notes in circulation is also higher.
Advantages of Cashless Economy
• Tax avoidance is reduced.
• Prevent Black Money.
• Protect/Reduce banking services as everything is done digital.
• Real Estate prices will be reduced.
• Efficient, easy and transparent transactions.
• Reduces corruption.
• Cashless transactions are Hygiene.
• ATM operations are reduced.
• Speed, no delay, no queuing, and satisfactory.
Challenges in making India a cashless economy
• Internet connection should be available and financial literacy must be given.
• There is less interest to move towards cashless economy.
• Small retailers must have resource to invest in electronic payment.
• Consumers sometimes act as a barrier.
• Fear of extra charges when using cards and other digital means.
• Lack of access to payment gateways, especially when refilling the digital wallets.
Steps to demoralize use of cash by RBI and Government
• Promoting mobile wallet, which allows instant payments of bills, recharge mobiles, send e-gifts and money.
• Licensing of payment banks.
• Promote e-commerce by reducing restrictions in the FDI norms.
• Introduction of UPI for easy and simple electronic transactions.
• Surcharge and service charge on cards and digital payments have been withdrawn.
The best way to implement Cashless Economy is through Mobile payments. It helps to keep the digital money in the mobile wallet and thereby replacing physical cash and even credit cards. Nowadays it is quite common we buy and sell products and services through online by the help of some payment methods like PayPal, in which we link our bank account with the online payment processing.
Working of Mobile Wallets
Mobile Wallets are applications in mobile which enables financial transactions. Mobile Wallets are also known as electronic/e-wallets, virtual wallets, digital wallets and so on.
While performing a transaction through mobile wallet we must follow some payment procedure such as- enter or scan a code or address and then the amount will be automatically deducted from our mobile wallet and is transferred to sellers/merchant’s wallet amount.
Examples of Mobile Wallets
• E-payments Services- Service provided by e-commerce payment systems for online purchases, electronically. Mobile app created by banks, Google wallet, Apple Pay, Samsung Pay, and PayPal all comes in this category.
• Loyalty and coupon based wallets- Helps to link and group your entire loyalty card accounts into one single roof. Examples are Starbucks, Gyft, Key Ring, and Level Up.
• Peer-to-Peer Payment Wallets- For payments between friends and family. Examples are SquareCash, Venmo, and Circle.
• Cryptocurrency Wallets- They are specific wallets to keep single or multiple altcoins on your phone. Bitcoin wallets are example for this.
• Hybrid Wallets- Support both digital currencies as well as traditional cash currencies. Wirex is an example.
• Remittance Wallets- Similar to peer-to-peer payment wallets. But have more focus on helping the receiver to collect the money.
• Messaging App Wallets- These Apps are very new, they receive money from friends or family and also can be used to pay for products and services. WeChat, Telegram, FB Messenger.