The Prime Minister Narendra Modi, demonetized 500 and 1,000 rupee notes on November 8th 2016. Today is the 100th day, since these high value notes were scrapped. Yes, today is 100 days since demonetization. The aim of this move….Break the back of corruption and terrorism in India, fueled by black money, usually hidden in 500 and 1,000 rupee notes. A lot of counterfeit (fake) 500 and 1,000 rupee notes reached the hands of terrorists. Terrorists in India thrived because of fake currency.
Yes, demonetization was a war against black money, fake currency, terrorism and corruption. One of the biggest benefits of demonetization was rarely talked about. Making India a cashless economy. For those who don’t know, a cashless economy is one in which almost all transactions are done, using cards or digital modes of payment.
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After demonetization, citizens lined up to withdraw the new 500 and 2,000 rupee notes, at banks and ATM’s. There was a severe cash crunch in metro cities. ATM’s struggled to load cash. As citizens struggled to get cash to make payments, they discovered a new way of solving this problem. Making payments using digital modes of payment. One of the biggest benefits of demonetization was discovered….Making India a cashless economy.
The Government wants to reduce cash transactions in India. The Government urges you and other citizens….Use digital modes of payment and reduce your dependency on cash.
Restrictions were imposed on cash withdrawals. You are allowed to withdraw only INR 24,000 a week, from your bank account. You have no choice but to adopt digital modes of payment. Consider this a blessing in disguise. Digital modes of payment reduce cash dependency and destroy corruption in the economy. While India cannot become a 100% cashless economy, it can definitely become a less-cash economy. Remember, before demonetization, 90% of transactions were made in cash.
A mobile wallet is a digital equivalent of a physical wallet. You can load money into the mobile wallet online, using your bank account. You store cash and make payments, using your mobile wallet. You can pay for groceries, cab rides, petrol and even movie tickets, with your mobile wallet.
Net banking is a very convenient way to pay your bills from the comfort of your home. You can pay the electricity bill, water bill, phone bill, gas or any other utility bill in seconds. All you need to do is activate net banking and then create a unique name and password. You can even link your biller to your account. You then decide if you want the bill to be paid automatically, or only after you review the bill.
With mobile banking, your smart phone is now your bank. You can do mobile banking only with a registered mobile number (registered with the bank). You have a unique PIN called MPIN or Mobile Banking Personal Identification Number. It is a 4 digit or 6 digit secret code, very similar to an ATM PIN. You can easily make payments for utility bills and other payments using mobile banking.
You want to buy that lovely new watch at a store near your home? You simply swipe your debit card at the merchant POS and the merchant enters the amount. You then enter the PIN on the key pad. Money is debited from your account and the payment is made.
Unstructured Supplementary Service Data popularly called USSD, is based on mobile banking. You can pay using USSD, even without internet connectivity. All you need is a phone (even a basic feature phone), a bank account and your mobile number which you have registered for mobile banking.
You want to make a payment? All you have to do is Dial *99#. You get a USSD message on your phone, asking for the first three letters of your bank. You could also enter the first four letters of your IFSC code. You enter the relevant letters. You then choose send money using MMID (Mobile Money Identifier). You then enter beneficiary mobile number.
You then enter beneficiary MMID which you must get from the person you want to send money to. You then enter the amount and relevant remarks. You finally enter the MPIN to authorize the transaction.
BHIM which stands for Bharat Interface for Money is an app, which allows you to make quick and easy transactions using UPI (Unified Payments Interface). You can download BHIM App from Google Play Store. You can easily pay the local shopkeeper using the BHIM App. You simply open the BHIM App on your smart phone and choose SEND MONEY option. Type in the amount you have to pay and the shopkeeper’s phone number to make the payment. The money gets debited from your bank account and credited to the shopkeeper’s bank account.
Want to buy that lovely dress? Just use your thumb and make the payment using the Aadhaar enabled payment system. How do you do this? The merchant has a Smart Phone, which would have a finger print scanner connected to it, via an application. You place your finger on the scanner, to authenticate the transaction. Your bank account needs to be linked to your Aadhaar Number. The amount gets deducted from your bank account and credited to the merchant’s bank account.
Demonetization has done a great job of making India a cashless economy. Goa became the first state to go cashless from December 31st 2016. Would this have been possible without demonetization? You be the judge. Be Wise, Get Rich.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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