Last 15 August, India celebrated its 73rd Independence Day and Prime Minister Narendra Modi reinforced the idea of digital payments, encouraging businesses to “put up signs of ‘Digital Payment ko haan, nakad ko na’ (Yes to digital payment, no to cash)”, reports The Times of India.
India faced a series of dramatic consequences when PM Modi made the bold decision in November 2016 to demonetise the two highest value banknotes of Rs 500 and Rs 1000 banknotes, accounting for 84% of the value of cash in circulation. What began as a move to eliminate tax evasion and money laundering to regulate the hoarding of ill-gotten cash, is now described as a failed initiative by the Reserve Bank of India who reported that 99% of old bills removed from circulation eventually found their way back into the system and that cash in circulation grew by 37.7% between March 2017 and March 2018.
“As a consumer, I do not have the confidence to not withdraw cash, because at 70% or 80% of places where I need to spend the money, digital payments are not accepted,” said Navtej Singh, the CEO of digital business at Hitachi Payment Services Ltd., which supplies automated teller machines and point-of-sale machines across the country.
Despite the increase in cash demand by Indian citizens, India has seen a gradual decline in the number of ATMs due to tighter regulations that makes the maintenance of cash a costly affair. Now, with the PM’s adamant push towards digital, it will be interesting to see how his latest pronouncement will affect the payments industry.