Digital Payment Essay GD Topic is on the rise after demonetization in India. Digital payments refer to electronic consumer transactions, which include payments for goods and services that are made over the internet, mobile payments at point-of-sale (PoS) via smartphone applications (apps), and peer-to-peer transfers between private users.
Prime Minister Narendra Modi has pushed Indians to accept cashless transactions, giving the digital payments sector a significant boost.The sector is experiencing an extraordinary jump in growth since November 2016, when the government demonetized high currency bills (Rs 500 and 1000) – which represented 86 percent of India’s cash in circulation. By February this year, digital wallet companies had shown a growth of 271 percent for a total value of US$2.8 billion (Rs 191 crore).
But this surprise demonetization also did something else: it pushed millions of new users onto the country’s digital economic grid by virtual fiat. Not even the banks were notified in advance of Modi’s plan, and, even with strict exchange limits that prohibited people from exchanging over 5000 worth of rupees at a time. As the demonetization process continues, Modi’s rhetoric is less about fighting corruption and more about transitioning India to a cashless economy.
Modi’s demonetization initiative has been a boon for India’s e-payment providers. Paytm reported a three times surge in new users- tacking on over 14 million new accounts in November alone. While Oxigen Wallet’s daily average users increased by 167% since demonetization began.
However, the initial difficulties have diminished now and the people are beginning to realize the safe and convenient modes of digital payment. Moreover, to encourage the people to further go for cashless modes, the Narendra Modi Government has provided a list of incentives and measures.
Digital transactions are traceable, therefore easily taxable, leaving no room for the circulation of black money. The whole country is undergoing the process of modernization in money transactions, with e-payment services gaining extraordinary momentum. A large number of businesses, even street vendors, are now accepting electronic payments, prompting the people to learn to transact the cashless way at a faster pace than ever before.
Post-demonetization, the people have finally started believing in the power of the plastic money in the form of credit card/debit card, and other channels of electronic payment. Online banking has gained prominence due to unavailability of enough cash in the market.
Cashless transactions have made people keep all their cash into the bank and hence liquidity in the banking system has increased. Also, it has stopped the flow of black money, up to some extent. Now the banks and financial institutions have more money to lend to the people to support the growth of Indian economy. The other most important advantage is that this situation will make people pay their taxes in a transparent manner, hence the government will have more money to run various schemes meant for the welfare of the public.
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