Days after the Narendra Modi-led government decided to demonetise Rs 500 and Rs 1,000 currency notes, the queues outside banks and ATM centres only seem to get longer. With people scrambling to exchange their old banknotes, the use of plastic money in the form of debit and credit cards is being touted as the way forward. Even the government is promoting cashless transactions to enable people to get by.
- But how feasible is the idea of a cashless India?
- Is the total number of cards enough for India to go cashless and still transact freely?
- What is the current status of POS terminal penetration in India?
- What do people use debit cards for?
- What are the challenges in increasing the spread of plastic money in India?
- Should India go cashless?
Economic costs of a money supply crunch and the difficulties in using plastic money on a larger scale across a wider geography in India make it difficult for India to go cashless. Given India’s economic reality, telling people to go cashless might be like telling the poor to eat cake if they can’t find any bread.
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