The Year Of Digital Money

The presumption that we are moving to a cash less society is passé. In 2015, Akodara, a small village in Sabarkantha district of Gujarat went cash less. It was possible for this nondescript village to go cash less because ICICI Bank adopted this village. Other factors like a mobile phone in each of the 200 households with about 1,000 people in the village which is primarily into farming and milk production helped this move. The only other place in India, where there is no exchange of cash is among the Sentinelese, who inhabit the Andamans.

- Narayan Krishnamurthy

From time immemorial, money has played an important role in our lives. The way money is perceived has changed—barter economy to currency as we see it today. There are several problems with money as we see it today—it takes up space, is relatively hard to transfer from one person to another, and moves slowly through the financial system. Yes, money’s form has changed from notes to plastic to digital and what not, but its role is irreplaceable. The convenience of less cash has been well utilised by technology and today, that is what is driving us to adopt digital payments.

As much as we leapfrogged the telecom revolution by taking on to mobile phones like fish to water, we Indians have it in us to move from physical cash to digital cash. In fact, knowingly or not, a lot of the way we transact is now electronic or digital. Most people know their salaries have reached them when their mobiles ping. The adoption to digital wallets in recent times is again a sign of consumer maturity—they want friction free movement of money. The volume of money transfer by way of RTGS or IMPS and any of the other available options is an eye opener.

TAP OR SWIPE?

That is all it takes to move money and the first to realise its importance was the ubiquitous insurance industry. More than a decade ago, health and motor insurance, went the cash less way to settle claims. For those who remember; the move was predicted to be a failure from the start. Yet, ask anyone today to cough up the bill at the garage or the hospital and then raise a claim and chances are you will be considered a weirdo. Among the financial products, insurers—life, health and vehicle—demonstrated how digital payments could change the paradigm for consumers. Consumers, realised the cost benefit working to their favour made a quick shift.