Cashless Economy is an economic state, whereby the financial transactions are not carried out in the usual sense of exchange of paper currency or coins for the purchase of a certain good or service. The mode of transaction in such an economy is essentially digital which uses virtual currency through mediums such as debit/ credit cards, internet banking, mobile wallets, digital payment applications, Unified Payment Interface (UPI) service, mobile banking, etc. Hereby, the traditional form of currency is replaced by its electronic representation. The main point that underlines the basic concept behind this economy remains that it must be least dependent on the use of the paper currency.

The digital payments made waves in India with the rise of the e-commerce companies which was followed by that of the digital wallet companies. Since it was just the inception of the latter, it made amply sure to lure the customers through its lucrative offers and cash backs. Considering the ease of use and increasing smartphone penetration whose importance in a country like India can never be overestimated owing to it being the second largest market of the smartphones, the digital wallets took not long to become a favourite amongst the populace. But the introduction of the digital wallets was not the only spur for India to begin taking steps towards a cashless state of economy. The demonetisation drive of November 2016 by the Modi Government was another major push that heralded a carved-out path for reducing the huge dependence of an average Indian on the cash.

But as we know that there are positive and negative aspects attached to everything, which in fact is not a commonplace finding but an essential fundamental truth, it only makes much more sense to throw a light on both such aspects of the cashless economy.

Positive Aspects

So, as far as the positives of this particular economy are concerned, one of the most important benefit of its and also a very significant one is that it relieves the individual from the necessity of carrying bulky wallets filled with cash on an everyday basis and also from the long and gruelling wait in long queues for the purpose of withdrawing money because the requirement of the physical cash is removed for making any sort of payment. All one needs to do is to carry a smartphone with an internet connectivity in it or a debit or a credit card. Considering the various factors like convenience to pay, the increasing smartphone penetration, rise of payments banks and the likes of the digital wallets, progressive regulatory policies getting implemented along with an increase in the use of mobile internet the digital payment industry in India is getting transformed which is no less helped by the readiness of the consumers towards this platform.

The customer readiness towards adoption of a cashless state can be easily attributed to the efficiency with which the whole process of money transaction takes place and how, at the same time, so much convenient and expedited it becomes. You don’t even have to leave your home for making a purchase!

Moreover, the digital transactions not just happen in a user-friendly way but also, they can be easily traced which introduces an element of transparency. So, ultimately even the black money, tax evasion, terrorist funding, many laundering and many other illegal activities can also be traced. To boot, going cashless helps in reducing the cost of maintaining the circulation paper currency and ensures a better control over the flow of money. But as we discussed that positives and negatives are two different sides of the same coin, the positives brought to the fore so far are not the only elements of that pervade this economy; there are some pitfalls too.


There are many hurdles that have erected themselves since the inception of this economy; the most prominent one is the one related to the rural India. There are many remote locations in India which have no access to even the basic facility of electricity, access to the mobile internet connectivity is a far cry. Due to this, the rural people residing such locations are still not aware about the digital transactions and payment through APPS. Poverty and illiteracy are considerably the major impediments in the way of India becoming a cashless economy.

Also, there is this another flaw to the digital transactions of them being not secure and safe enough. Risk involved in digital transaction is lofty, because the rising cyber frauds and hacking bank accounts are becoming more and more common these days. To add on to the increasing list of problems, another is related to the charges attached to the use of cards, internet banking etc., which sometimes become a hindrance for people to go in for a complete cashless transaction.


India becoming cashless is not a pipe dream any more, but it is still a far-fetched idea because there is still a majority of Indian population which lacks the access and knowledge of the very basic requirements of the digital payments. And the benefits of a cashless economy will only be realized by the mass adaption of digital payments. But before diving deep into this state, it is incumbent upon the Government to carefully analyse and evaluate the merits and demerits of this system. It should give priority to providing a secure platform for digital transactions along with spreading financial literacy and awareness about cashless processes especially in the rural regions of India. Only when the rural India adopts cashless economy and the dream of financial inclusion becomes a reality, only then we can say that Cashless economy is a boon for the society and the country.