Cash is ready. Cash is hard to measure. Cash is King. Cash is anonymous. Cash is not going away.
The role cash plays in established economies is still significant, but the adoption of digital transactions is held out as a signpost of the maturity of a national or regional economy. As the fast developing economies of China and India seek to modernize and fully take advantage of their total potential consumer punching weight, expanding the reach and functionality of access to digital transactions will be a key component.
Slowly, but surely there is a cashless and digital payments revolution underway in India and it deserves a lot more attention than it is currently receiving. With the recent ruling, Aadhaar cards will be used in more schemes and will play a major role in financial inclusion. The department of post, which has now obtained a licence to open its payment bank, has an almost unrivalled reach across the length and breadth of the country, and could be the game changer.
The expanded access financial institutions in India will have to the information collected and held by the nascent Unique Identification Authority of India (UIDAI) will help to solve the identity confirmation of digital payment authorization. When combined with other initiatives for the expansion of access to financial services under the Pradhan Mantri Jan-Dhan Yojana (PMJDY, loosely translated to “Prime Minister’s People Money Scheme”), the expansion of digital payments in India will provide improved visibility economic trends.
Mercator Advisory Group believes India’s efforts to expand access to the digital economy will be watched closely by other developing economies and established economies alike to see how effective it is in expanding access to financial services for those previously “unbanked”.
Overview by Joseph Walent, Senior Analyst, Emerging Technology Advisory Service at Mercator Advisory Group
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