The Road To A Cashless World Economy
In recent years, various economies all over the world have reaped the benefits of technical revolutions. The increasing use of the Internet and mobile phones has paved the way for multi-channel banking, e-payments and e-commerce. He also addressed the emergence of electronic governance. Many countries are moving towards cashless economies. The recent demonetization in India has also led to a debate on a cashless economy. Today's consumers prefer faster and more cost-effective solutions in all aspects of life. The world is moving to become cashless. The initiatives were taken by companies and governments. Promote cashless partnerships, technological innovation and financial inclusion. This will emerge as the main driver of the significant growth rates of non-cash transactions in emerging markets. While the spread of mobile payments and digital innovation should be the high growth pedals in all regions. New technologies and the expansion of traditional payment infrastructures in the digital world will lead to the growth of the digital payments industry for the next few years. Introduction A cashless economy is a system in which any type of monetary transaction is carried out through digital means such as debit cards, credit cards, digital funds transfer, mobile payments, Internet banking services, electronic bank transfers of funds, mobile wallets and other recently developed payment channels. It leaves very little chance of cash flow in the economy. The movement towards the use of non-monetary transactions began in everyday life during the 1990s, when electronic banking began. By the decade of 2010, digital payment methods were known in many countries, including brokers such as PayPal, digital portfolio systems operated by companies like Apple, contactless payments and NFCs with electronic paper or smart phones, invoices and electronic banking services. By the 2020 cash payment had become disfavoured. Benefits:
- Cost savings: the Cashless system reduces printing and storage costs.
- Transaction speed: the transaction can be done sitting at home or sitting on a chair. It is not necessary to go anywhere to complete the transactions.
- Threat reduction: the risk that money is stolen or lost is nominal. The costs of physical security, physical cash processing (bank levy, transportation, counting) are also reduced once the company has finished the cash. Even if the card gets up or is missing, it is easy to block a credit / debit card or a mobile device. It is also a safer and easier shopping option when traveling.
- Adequate: the ease of completing financial transactions is probably the greatest stimulus for digitizing digital transactions. With the use of digital transactions, you can create a side queue for ATMs, daytime transactions at night and save time. It is no longer necessary to physically know the customer, since the payment method has exceeded the limits on physical presence.
- Parallel economy: in a cashless economy it is easier to track down and track down black money and illegal transactions, unlike the money-based economy where money does not enter the banking system. In the case of digital transactions, it is easy to track and monitor doubtful transactions because all records are accessible with banks. This allows users to keep track of all their expenses and manage the budget efficiently.
- Tax revenue growth: traders, small businesses, traders and consumers regularly use cash to avoid taxes. However, in a cashless economy where all transactions will be carried out through a prepared channel, through banks and financial organizations, the government will be able to verify them and take appropriate measures against the activity. This will result in clearer transactions that in turn will lead to corruption in the country's economy.
- Discounts: Many e-commerce sites offer incentives in terms of discounts, reimbursement points and loyalty points to customers to make digital transactions for online purchases. Digital revolution The financial inclusion measures in Emerging Asia will drive the high growth rates of non-cash transactions, particularly in India, Vietnam and Indonesia, as mobile payments and other forms of digital payment are available.
Examples of initiatives in these countries that will drive the digital portfolio industry are: the Bharat Interface for Money (BHIM) mobile app for the Government of India, the National Strategy for Financial Inclusion (SNKI) of the Indonesian government, which aims to increase the percentage of citizens in banks from 36% to 75% in 2019; and the BIM of Peru, which allows peer exchange, cash / cash collection, mobile top-ups and merchant payments. Nearly 75% of the world's population is expected to have access to the Internet by 2025. 80% of these users will also access the Internet via their mobile phone. Over the years, smartphones have become smarter and come with high-end technologies such as powerful processors, substantial memory, high-resolution cameras, bar code scanning, GPS geocoding, NFC-based technologies, social networking platforms, etc. The user is a potential activator of electronic commerce. 1. Evolution of a more demanding consumer with digital knowledge. Today, the consumer of intelligent technology has moved on digital support for many things and monetary transactions are one of them. The emergence of the electronic bank together with resellers and e-commerce companies and other features, such as biometric authentication and integrated rewards, should bring customers' expectations to change payment solutions. Today's consumer expects a perfect digital experience of every interaction he has with others in the virtual world. Therefore, there is a growing need for an intuitive, frictionless user interface and design. Digital portfolios are expected to offer seamless interaction on smartphones and applications that respond to changing customer needs. This will help improve and increase customer interactions and establish relationships with them. The lifting of smartphones has led to the emergence of e-commerce services, mobile commerce and other services, including application-based digital payments for the use of various services. Value-added services, such as cash repayment, bill payment services, loyalty points, rewards and ease of use, have led to the rise of these digital platforms. These developments have led to a modern payment model. 2. New technologies will lead to digital portfolios.
When it comes to mature markets, a combination of NFC / contactless technology and mobile payments can lead to the development of new payment use cases. Countries like Australia, Canada and the United Kingdom are showing this trend. In the future, it is expected that there will be many cases of IoT and blockchain. Companies such as the Abraare mobile payment company are experimenting with blockchain technology to enable mobile P2P payments and cross-border payments. Suppliers of mobile exchanges such as Coinprism and Xapo can use Blockchain to obtain digital money in digital money; The Reserve Bank of India (RBI) has adopted the chain of blocks as the basis of a digital currency within the country. In addition to integrating IoT-enabled payments, banks will also create more digital contact points. OpenAPI is another advanced technology that upsets the digital wallet industry. OpenAPI provides secure and standardized interfaces to all stakeholders, allowing aggregators to collect data in one place. The emergence of new markets According to a recent study, consumers in markets like India, South Korea and China are more open to trying out mobile payments than the US, UK and Australia and others. One of the reasons for this shift is the growing numbers of internet users in these countries. Further, according to a World Payments Report, 2017 the growing influence of these markets on the digital payments landscape is taking the industry to newer heights. Indian economy has traditionally been dominated by cash. However, the increased adoption of smartphones together with a favorable regulatory environment is pushing the economy to a less cash-dependent state and promoting the usage of digital payments. The digital payments industry has a huge potential in the Indian market. It is estimated that the total payments conducted via digital payment instruments will be in the range of $500 billion by 2020, which is approximately 10X times the value at present. The major contributors to this estimate will be person to merchant (P2M) transactions driven by digital payments at the physical point of sale, followed by business to business (B2B) and peer to peer (P2P) transactions. Digital wallets gained a major boost during the demonetization drive of 2016. Further, some key actions like – expansion of the digital payments infrastructure at merchant establishments, expansion into rural areas, relaxation in the PPI norms, incentivization of digital payments at fuel pumps, toll plazas, insurance portals etc. and launch of the Bharat QR codes, have helped further in the adoption of the technology.
The fastest growing segment of digital payments is Prepaid Payment Instruments (PPIs), which has grown at a CAGR of 97% in the same period to now account for 10% of the total digital payments volume. Mobile-wallet is the largest category within PPIs, but the segment also includes prepaid cards (including gift cards) as well as other paper vouchers. The emergence of a collaborative ecosystem While new technological innovation is transforming the payment landscape, regulators from central authorities around the world are taking steps to facilitate the digitization of payments. Regulatory authorities will work to create a level playing field for all stakeholders, as well as implement consistent standards for cyber security, data privacy, messaging formats and interface standardization. Technological innovations will make the digital payments industry evolve and adopt a collaborative ecosystem. While Fintech players and other third-party payment companies (TPPs) give way to a better and faster payment interface, banks are opening their platform to these companies. Some players like PayU have already acquired Citrus Pay to become a bigger group. This consolidation aimed to expand to more offers in banking and other services. In addition, new participants in the payment space are increasing competition and forcing payment service providers to consolidate to capitalize on economies of scale. Some examples of such collaborations would be the acquisition of Monitise and PCLender by Fiserv to provide a wider range of offers for customers and the integration of Misys and FIS. In the coming years, the industry will see more consolidations of this kind and payment service providers with advanced digital capabilities could become acquisition targets as traders seek to expand their operations to fully exploit the expanding digital payments market. Strict data privacy laws will be established In recent times, data breaches and cyber-attacks like WannaCry Ransomware must result in stricter data privacy and data security laws.
The General Data Protection Regulation of the European Union (GDPR UE) and the cybersecurity regulation of the New York Financial Services Department are already in place and several regulations are provided by the central authorities with sanctions for non-compliance. In addition, the United Kingdom has announced a data protection bill24, which gives consumers more control over their data. The new Chinese cybersecurity law includes responsibilities such as the suspension of commercial activities and fines of up to 1 million RMB for non-compliance. The growth of the IT security sector by 35% in 2016 is also a sign of greater emphasis on cyber security. However, the lack of coordination in cybersecurity laws in different countries is a challenge for multinational companies operating all over the world. Conclusion: The digital portfolios and mobile payments industry will expand over the next few years as the infrastructure will become more robust, enablers such as NFCs, POS acceptance devices and online integrated mobile payments. However, security, ease of transactions and the activation of multiple transactions on a single platform will be crucial for getting more users. The digital payments ecosystem is in a growth curve and a collaboration ecosystem with financial services, third-party payment providers and Fintech companies will emerge in the coming years.
References
- http://www.mbauniverse.com/
- https://financialtribune.com/world-economy/57767/india-sees-rise-in-cybercrime
- https://en.wikipedia.org/wiki/Cashless_society
- https://www.finance-monthly.com
- https://www.robosoftin.com/blog/future-of-digital-payments
- http://ijsae.in/index.php/ijsae/article/download/197/134
- https://www.slideshare.net/cashless-india-76609146
