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India Just Flew Past Us In the Race To E-Cash (backchannel.com)

Posted by BeauHD on from the 21st-century dept.

New submitter mirandakatz writes: Since India's prime minister banned 86 percent of the rupee notes in circulation last month, citizens have been waiting in hours-long lines for ATMs. But these circumstances have also created an unexpected progression: a burgeoning cashless economy. At Backchannel, Lauren Razavi explores how India is now beating many Western countries in adopting mobile payments, and how demonetization has triggered a radical shift toward reimagining India's enormous informal economy as a data-driven digital marketplace. From the report: "Before last month, Paytm, a mobile app that allows users to pay for everything from pizza to utility bills, saw steady business -- it was processing between 2.5 and 3 million transactions a day. Now, usage of the app has close to doubled. 6 million transactions a day is common; 5 million is considered a bad day. Rather than being forced to idle away time in excruciatingly long lines, 'people are proactively exploring other ways to settle payments besides cash,' says Deepak Abbot, senior vice president at Paytm. 'Now people are realizing they don't need to really line up, because merchants are starting to accept other forms of payment.' All of this has created a newfound system that practically incentives mobile payment. With so many people queuing up at banks every day -- and a lot of Indian bureaucracy to wade through in order to open a traditional bank account or line of credit -- the appeal of more convenient digital alternatives is easy to understand. According to a report in the Hindu Business Line, as many as 233 million unbanked people in India are skipping plastic and moving straight to digital transactions. 'Cash has lost its credibility and payments are no longer perceived in the same way,' says Upasana Taku, the cofounder of Indian mobile wallet company MobiKwik, which reported a 40 percent increase in downloads and a 7,000 percent increase in bank transfers since demonetization. 'There's chaos at the moment but also relief that India will now be an improved economy,' she says."

5 of 216 comments (clear)

  1. What's the rush? by Anonymous Coward · · Score: 5, Insightful

    That's a race I don't want to win.

    1. Re:What's the rush? by techvet · · Score: 5, Insightful

      Completely agreed. Elimination of cash means the government knows everything you are doing.

    2. Re:What's the rush? by DRJlaw · · Score: 5, Insightful

      That's ridiculous on its face. Counter-example: I give you an ounce of gold and you give me a laptop. Extend that example to any comparable cashless payment platform.

      Ah, youngsters.., they forget that an ounce of gold was cash, for example, classic US "double eagle" coins prior to 1933.

      Hint: cash is any material object commonly used to exchange value, as distinguished from use for barter between individuals seeking specific items.

      "Cashless" is any electronically-based payment system relying upon an exchange of information -- rather than material obects -- and requiring three parties, such as a buyer, a seller, and a payment system. Bitcoin's third party is those maintaining the blockchain.

      That three party system invevitably extends to include the government, which will demand things like "complete user security settings and history (including confirmed devices and account activity)." Presuming that the information is not public to begin with, as in the bitcoin blockchain.

  2. Banning cash is bad news by cfalcon · · Score: 5, Insightful

    The summary makes it sound like losing access to cash is a good thing, as long as it can be replaced by a number on a server in all cases. It is not.

  3. The rest of the story by Bruce+Perens · · Score: 5, Insightful

    India has devalued its largest denomination bills by surprise, in an attempt to get folks in the "black economy", and this even means professionals like doctors, to account for their cash and stop avoiding taxes. Everyone has a very short time to deposit the old bills in a bank, or lose their value.

    The problem with this is that because it was a surprise, India did not print new bills first, and does not have the capacity to print them at anything near the number required.

    So, right now many businesses are shut down because they can't pay their employees. It seems that it was the case that these employees were paid in cash and might not be able to get bank accounts.

    Their economy is going to take a hit.

    --
    Bruce Perens.