TOP 7 BENEFITS OF CASHLESS ECONOMY
After demonetization, India is moving towards a cashless economy. It makes one’s life easy for payments as transactions can be done easily in cashless economy as there is no need to go lengthy procedures of payments. Going cashless not only ease’s one’s life but also helps to authenticate the transactions. This initiative is started by Prime Minister Narinder Modi with an aim to curb corruption and black money, thus leading to economic growth. It is preferred by every individual and it has number of benefits, some of which are listed below:
Economical in nature
With cashless payments there is reduction in manual accounting which for the companies and the government results in efficiency of work. It also provides effectiveness to the work as it does not waste the human efforts and also the work is completed in less time. It is economical in terms of resources as well as time.
Budget Discipline
Nowadays, people are becoming spendthrift. They usually spend their money on day to day miscellaneous expenses like a regular cup of tea with chips etc. But with the digital payments these expenses would be in control because of no physical cash in the pockets. So this results in higher savings thus, higher investment.
Tracking Spends
There is proper record of all the transaction which makes it easy for all the people to keep check on their spending. Example: when we use digital wallets the record of all the payments including miscellaneous payments gets recorded in the wallets itself. So it leaves footprints of all the transactions. With this it can help to compute income tax return in case of scrutiny.
Economic growths with increase in tax revenue
Cashless transaction helps to keep a check on the income of people as in cashless economy everyone has to do transaction with banks only. Due to which there is record of the income of individuals with banks, so no one evade tax liability. This results in the increase in the collection of tax revenue which benefits the society in several ways like building more infrastructures, helping poor by providing educational institutes, health care centers. This gives a hit to the poverty as it decreases from the economy.
Discounts
Many discounts are offered when the digital payments are made. Through which saving of individuals is increased. Services through mobile wallets like PayTm, Oxigen etc offers rewards to the people in way to promote their apps. For example: One can save up to 0.75% on the purchase of the fuel by digital payment. These days in Delhi petrol price is Rs.63.47 per litre can be brought to Rs.62.99 per litre.
Drugs free environment
When addicted people are forced to go cashless, there is less available in their pockets to spend on the things like drugs, alcohol etc. As the consumption of drugs is illegal, people in cashless economy has to pay through banks only, it will tracked the purpose of expenditure, thus it will results in a drug free environment.
Reduction in tax rate
As availability of hard cash decreases at home and gets deposited in banks this results in lesser scope of hiding income and evading taxation , thus there would be more tax payers in the economy it will ultimately leads to decrease in rate of taxation for whole country.
• Reduction in Red tapism and Bureaucracy.
• It helps to curb the generation of black money in the economy.
• Cross country transactions are also possible only with the digital payments.
• Production cost on coins and paper currency is also reduced as government of country need not to print currency at all as people will be going cashless.
• There is no need to carry bulk of notes in pockets by the people.
• Accounting of all transaction becomes easier, thus ease in the management of the organization.
• There is lack of availability of cash for the illegal activities such as corruption & gambling, thus reduction in illegal activities in the economy.
• With the cashless society, there will be a big cut in the insurance and management activities for currency.
• Greater efficiency in the welfare programs such as donations to orphanage, old age home, charitable funds etc occurs because of transfer of direct transfer of money to the recipient’s account.
• The problems like bank robbery, burglary, extortion etc got declined with the demonetization.
No need to go every day to bank for depositing
10 SAFE WAYS TO GO FOR CASHLESS PAYMENT
As India is going through a major change in the economy i.e. Demonetization, it has become very difficult for economy to do transaction for goods & services, payments etc without the currency in hand. The purpose of this change is not just to remove black money but also to encourage cashless transaction. It is not an easy task to stand in the long queues for withdrawing cash. To overcome this situation a big opportunity is to go cashless in this modern era. A cashless method will always be more transparent as it leaves its footprint and due to shortage of cash & for safe transaction going cashless is best option.
Here are some ways to go cashless:
Cheque
It is the one of the oldest ways of cashless payment and is familiar to everyone. In this document a specific amount is filled with the signature of the payer payable to payee. After that it gets deposited in the banks and a bank processes this payment by a clearing house. It is a fiduciary form of money which is accepted as a medium of exchange only because of the trust between payer and payee. These are not issued by the government.
The transaction done through the cheque is recorded which becomes the proof of the payment made also. Cheque may get dishonoured because of inadequate payments or due to mismatch of the signature of the payer, this may trouble the people.
Demand Draft
Another way of going cashless is the use of Demand Draft. It is the safest option to receive payment from anyone. It is risk free way as it never gets dishonored as it is signed by banker. Banker issues only after making payment by payer to bank. It is not economical in terms of time as it takes a lot of time for payer to bank to make a DD and moreover it takes a lot of time for clearing for DD.
Online Transfer
The most common and the secure mode of carrying out the multiple transactions in the cashless society is online transfer of money from one bank to another. It is also known as Net banking transfer. People can transfer money from any corner across the world to anywhere using internet banking facility. This is faster as money is transferred instantly.
3 ways of online transfer are:
• National Electronic Fund Transfer (NEFT): Though NEFT, money gets transferred from one bank to another bank account. It is not on real time basis as it is processed in batches so there is some time lag in transfer of money. It is used for payments to third party.
• Real Time Gross Settlement (RTGS): Though RTGS, money gets transferred from one bank to another bank account but the transaction must be above Rs.2,00,000. It takes place on real time basis and is not bundled i.e. the amount is transferred one to one basis.
• Immediate Payment Service (IMPS): It is an instant inter-bank real time electronic fund transfer through mobile phones. Through this, fund is credited immediately when the transfer request is made from mobile. This service is available 24*7 throughout everyday of the year. This facility is provided by limited banks.
Credit or Debit Cards
This is a type of plastic money which is used for payment of goods and services. It is issued by all the banks. These cards can be used in the place of physical cash for the payments to be made. These cards are used for immediate payments. Through these cards 24*7 shopping can be done. These cards can only be used by swiping the card. After this the balance from the bank account is deducted. Payments made through credit cards give cashback/ discounts in your account. Banks use to charge high amount of interest rate on the credit card balance which the person fails to pay till the due date.
• Debit Cards: It allows the customers to use the amount of money they have already deposited in their account
• Credit Card: It allows the customers to borrow the money from card issuer upto a specific amount limit in accordance for shopping or withdrawing.
E-Wallets
An electronic wallet is a system which is used to make electronic transaction or payments such as from grocery to airline tickets, shopping and fund transfer. Customer and merchant both require a Smartphone with active internet connection to use e-wallet. Examples of E-wallet are PayPal, Payoneer, Skrill and PayZa. You need to link your debit or credit card with e-wallet.
Mobile Wallets
It is payment service through which businesses and individuals can send or receive or pay money using mobile devices. It is an application which can be downloaded from app store. These wallets are highly encrypted. You need to add money in these wallets using your debit or credit card or net banking, once you add money after that there is no need of any action just use your wallet. Examples of mobile wallets are Paytm, Oxigen, MobiKwik etc. There is no need of any card machine for accepting money. These wallets also give discounts. This method is also very common these days, but uneducated people can’t use this method of payment.
UPI Apps
It is a Unified Payment Interface App. It is used to transfer money from one account to another account. It is an infrastructure provided by NPCI (National payment Corporation of India) to all the public, banks where they can build their own interface. The person receiving payment is not required to share his bank details with the person making the payment. Any person can create an email ID eg: pqr@icicibank and can share that ID with the person making the payment. The person can transfer the money to that ID and the person receiving payment can transfer this amount to bank account. It is suitable for receiving small payments from a large number of customers as it is not possible for merchant to share his bank account details with everyone, also they do not have card machines. It works 24*7 on real time basis. The examples of UPI apps are SBI Pay, ICICI Pocket, Axis bank UPI App, PNB UPI etc.
Gift Cards
It is a readymade card which is issued by a retailer or bank. It is preloaded with a fix amount of money. Cardholder can purchase any item from the specific vendor by using this card i.e. it can be redeemed from the specifics shops only. One can gift the card instead of gifting cash. It is also given free of cost by some retailers. It is also used as promotion strategy by retailers. The card is valid for specific time and after that it is just a useless paper. Unlike other ways, it cannot be recharged for any value again.
AEPS (Aadhaar enabled payment system)
Using your Aadhaar card one can transfer money from bank account. It is like Micro ATM. With the use of smart phone and a fingerprint scanner, the transaction can be done. It is mandatory to link Aadhaar with your bank account. Aadhaar to Aadhaar fund transfer, cash withdrawal and cash deposit are the uses of AEPS. The payment is made only if fingerprint of the individual match with the details, so it is secure way of payment because no one can forge the fingerprint of the individual. It will cost Rs.15 per transaction.
USSD (Unstructured Supplementary Service Data)
USSD is called as codes which directly communicate with the server of Telecom Company. The codes that are used usually starts from the asterisk (*) and ends with the hash (#). Banking service is accessed to the fixed number i.e. *99#. Services of BHIM app is performed by the banking through the USSD service. This function can be used without the smart phone and internet connection. This function is session oriented. USSD payment option is supported by the SBI, ICICI, AXIS and PNB and many more.