November 2016 was an important time for the world. America was choosing a new President. As the world focused on the west, something was stirring quietly in the East.
The Indian Prime Minister Narendra Modi banned higher denomination notes of Rs. 500 and Rs. 1000 on the eve of the presidency announcement stealing much of the thunder in the news world. The move was aimed at eradicating black money and attacking corruption which are believed to be the obstacles behind the success of the country. Suddenly #demonetisation became a household discussion in far-flung corners of India.
India is largely a cash economy. People prefer cash payments over digital modes of payment even today. A large number of the Indian population don’t even have bank accounts and operate on daily wages. Therefore, the preference towards cash. In such a scenario, the government has received a lot of flak on the overnight ban on certain denominations and the introduction of Rs. 2,000.
There are reports of people waiting for hours in lines, the inability to withdraw your own money as banks are running dry themselves, people suffering heat strokes while waiting in queues and the long wait for the new currency to hit the vaults. Card transactions soared through the roof for those who had cards. The current sentiment is one of discontent and a general feeling of being inconvenienced. Any attempt to change how a system works will always meet with resistance as it is in this case. This move was part of a larger plan; the dream of moving India towards a cashless economy.
One might laugh reading this. I did. In a country where people don’t have bank accounts, can’t read or write, how would they embrace technology? The funny thing is, they did. In a few days, everyone from the local bhelwala to the vegetable vendor had a sign that read “Paytm accepted here”. It was a question of survival. Everyone has mobile phones. They seemed to finally learn how to use it for things other than phone calls.
Interestingly, the government also figured a way to interweave the cashless economy drive with another step that was met with much resistance. The Adhaar card. The Adhaar card-enabled transactions will not require a card or a pin. UIDAI is developing an app that can be used for receiving payments. How this would essentially work is by linking your bank account details to your Adhaar card. There will be a 12 digit unique identification code that will be fed into your mobile to enable transactions with the help of biometrics, either the iris or fingerprint. The Government is already working with mobile phone manufacturers to produce handsets that recognise biometrics to enable Adhaar transactions en masse.
This announcement has created a lot of chatter across board rooms. Vivek mathur, CEO of Giftease said, “Going cashless is a mammoth feat and is easier said than done. It is a welcome move and will be a huge time saver. But in a country like ours it is going to take a long time to implement. It will be interesting to see how the government goes about this”.
Going cashless has its advantages and disadvantages. A digital identity enhances security as you can remotely shut down a digital wallet if it falls into the wrong hands. It is convenient as you can combine multiple functions on to just one hand held device. It eliminates the need to carry cash or plastic. But in the larger scheme of things it will be impossible to predict how a cashless financial system would work on a large scale. Hackers will have a field day. Google can swear on its wallet all it wants, even they had to temporarily shut down a feature where users had to load prepaid information on their smart phones for spending. Biometrics can fail. Phone batteries die. Once you give out biometric information, nothing is private. Databases can be compromised.
Like everything else, technology forecasts will never be accurate. It ultimately boils down to the acceptance of the consumer. The Adhaar card itself is still struggling to gain a strong foothold in Indian households. Largely due to the time consuming and unplanned paperwork involved. If the current government can ease the circumnavigation of going cashless, chances are they will find acceptance faster. Until then we just keep saying, Cashless Din Aayenge!