A cashless society describes an economic state whereby financial transactions are not conducted with money in the form of physical banknotes or coins, but rather through the transfer of digital information (usually an electronic representation of money) between the transacting parties.[2] Cashless societies have existed from the time when human society came into existence, based on barter and other methods of exchange, and cashless transactions have also become possible in modern times using digital currencies such as bitcoin. However this article discusses and focuses on the term "cashless society" in the sense of a move towards, and implications of, a society where cash is replaced by its digital equivalent - in other words, legal tender (money) exists, is recorded, and is exchanged only in electronic digital form.

1. Cashless Economy
By:- NISHANTHI AN

2. What is a Cashless Society?
• No paper money or coins
• Everything is electronic
• Payment via E-wallets
• EFT- Electronic Funds Transfer
• EPS – Electronic Payment System
• Microchips/Smart Cards
• Fingerprints
• Retinal scan

3. Major Drawbacks of Cash
• At an individual level, cash is inconvenient to carry and manage. It
cannot be traced or insured as cash once lost or stolen cannot be
recovered.
• Cash is expensive to print, inspect, move, store and guard.
• Counterfeiting is always going to be a problem as long as paper currency
exists.
• Hand-to-hand currency is favoured by criminals as it does not leave a
paper trail.
• Cash transactions are not trackable in nature, thus providing no
transparency. This leads to corrupt practices and financial crimes such as
excessive money laundering.
• Monitoring of tax compliance is difficult for the Government.

4. Possible Impacts of a full Cash Abandon
• Banks are likely to be in favour of a cashless society as it saves them the cost of
printing, inspecting, storing and guarding ‘paper’ money. Costs also include the
security and labour involved in processing and transporting cash, maintaining
automated teller machines, and regulating the amount of cash in circulation.
• According to an estimate, European banks could save between €45bn and
€90bn annually if they get rid of cash from their systems.
• Prohibition on the use of cash could restrict criminals such as drug dealers and
people involved in possible unregistered activities like betting from doing
business.
• Eliminating cash could also mark an end to bribery and other such corrupt
motives as authorities would be able to track virtually all transactions. Tax
crimes would also stop.
• According to a study by Wolman, countries could save about 1 % of their GDP
annually by switching over to ‘electronic’ currencies.

5. Few Challenges to Cashless System
• People still rely on the idea of money being ‘physically’ realisable. For
some psychological reason, ‘paper’ money is revered more than ‘plastic’
money or ‘digital’ money. Cash keeps a check on people’s spending
habits.
• Anything that’s technological comes with a baggage of risks and security
threats. A very high and unbreachable degree of security would be
needed as a deterrent to hackers and cyber criminals.
• there would require some sort of digital awareness to understand the
working of a society with no cash. People who have grown up and lived
through times when a substitute for cash wasn’t even thought of might
face some difficulty in adjusting to a world without currency notes.

6. How to remove all the cash from the economy?
• There are many possible ways of going about this but an outright prohibition on
the use of cash is certainly not going to work. Rather, the central bank or
authority could ‘tax’ the use of cash, leading to the value of the paper currency
depreciate relative to the reserves, say by 10% annually.
• By managing the exchange rate between currency and reserves and pushing it
further, the central bank could remove the ‘zero lower bound’ and tax the use
of currency, which would thus tax the criminal and anti-social enterprises that
largely rely on currency.
• So a full restriction on the use of cash could be seen as a limiting version of
mildly extreme policies that tax currency by allowing it’s value to depreciate
relative to bank reserves.
• When the exchange rate between currency and reserves becomes large enough,
cash in the economy would cease to exist.

7. • The use of EMV chip-cards is gaining momentum in Kenya and other
countries in Eastern and Central Africa. When used with a PIN (Personal
Identification Number), the chip verifies that the customer is producing
his or her own card and only then authenticates the transaction.
• This has reduced incidences of credit/debit card fraud and helped in
establishing faith in electronic payment systems among the masses.
• Just recently, Master Card and Equity Bank unveiled a joint partnership
that plans to distribute 5 million EMV chips and PayPass enabled cards in
Kenya over the next 18 months.
• Far away in Canada, the Royal Canada Mint is looking to the future with
the MintChip, a new and innovative product that could become a digital
replacement for coins.

8. Cost of Printing cash
• According to RTI reply by RBI
• Before demonetization, India’s 86% cash was in the form of 1000 and 500 notes.
• It cost the central bank Rs. 3,917 crore to print Rs. 500 notes in circulation,
and Rs. 2,000 crore to print the Rs. 1,000 notes in circulation currently.
Denomination Cost of printing(rs)
2000 4.72
1000(Old) 4.06
500(Old) 3.58
50 1.80
20 1.5
5 .50

9. Cost on Coins
• Manufacturing of coins cost lot to RBI.
• The Indian one rupee coin (the one with highest circulation) weighs 4.85
grams and is made of Ferritic stainless steel (FSS) and has a diameter
of 25 mm.
• The value of metal will be 70 paisa when melted.
• Even more care needs to be taken so that no one can make money by
melting coins and selling metal in market.

10. Black money
• People intentionally do transaction in cash to save income tax.
• All illegal activates like money laundering, kidnapping, Bribe to
government officers, terrorist activities consummate in cash payments.
• Indian companies are reportedly misusing NGO and public trust for
money laundering.
• Generally people convert their black money into Gold and real estate.
• Still 8% of total black money is in cash.
• Recent demonetization will help to reduce black money which is in a
cash form.

11. Cashless economy boosted by Currency
Demonetization.
• Aimed at combating corruption and black money, this move also
came up with short-term pain and chaos for the working class,
small businesses and nearly anybody who deals with cash on a
daily basis.
• This move deeply impacts the working sections of society: drivers,
maids, cooks, electricians, plumbers.
• Anybody who provides services in the informal sector and depends
on monthly or bi-monthly cash payments.
• NO CASH- scenario boosted cashless payments in last two weeks.

12. PAYTM at HIGH
• Over 8,50,000 offline merchants across India accept Paytm.
• The highest increase in usage was seen in Chennai, followed by
Ahmedabad, Hyderabad, Kolkata and Bangalore.

13. Constrains For Cashless Economy
• On general day, only about 5% of payments happen electronically.
• India's literacy rate is at 74.04%. Bihar is the least literate state in
India, with a literacy of 63.82%.
• High taxation rate on finished goods, which induce manufacturers to deal
in cash for purpose of tax saving.
• Same case with service sectors.
• Lack of access to banking.
• Card swipe machines are costly as 7000Rs to 25000Rs.
• According to data available with MasterCard and Visa, some 14 lakh
merchants across India accept cards.

14. Cont…
• Fraud risk is vary high compared to cash.
• Internet is not accessible for every Indian.
• Only 34.8% of total population have access to internet.(Even after digital India
campaign)
• Still 88% of Data company’s customers using 2G Network.
• 6 out of 10 transactions fails because of low speed on 2G connectivity. Only 41%
Indians Own smartphones.
• And only 61% of total population own mobile phone.
• And Only 63% of total population having bank accounts (including Jan-Dhan
accounts)
• Many educated people also afraid to pay via online portal.
• That’s only reason COD introduced by Flipkart in India.
• Many internet users are not friendly with e-wallets and mobile banking Apps.

15. Is India Moving Towards Cashless Economy?!
• In developed countries, the figure of cashless transaction goes up
to between 50 to 60 per cent for personal expenditure volume.
And India only with 5%.
• Tech support is not robust enough to support even the existing
number of cards - some 26 crore credit cards and some 69.7 crore
debit cards.
• The country suffered a massive debit card breach in October 2016
that ended up affecting 3.2 crore debit cards across several banks,
only showed up the vulnerabilities of our banking networks.

17. THANK
YOU!