Please note that card payments are not at all popular in India and UPI is the most common means of digital payment.
Edit: I meant card instead of cash
This is false. https://www.orfonline.org/research/indias-upi-market/ (article from last month, citing the latest figures available to it.) "While India has recorded a significant increase in digital transactions, cash is still the dominant payment mechanism, with cash usage accounting for 59.3 percent of transactions volume in 2021."
This is a very privileged (and personal) view.
In terms of objective hard data, the percentage of Cash in Circulation to GDP (CIC/GDP) in India is about 12.7% which is about the same as 2005-2015 figures (12.1%), in fact it’s slightly higher.
Essentially the ratio of cash in circulation to the total economy hasn’t changed materially, in fact it’s gone up slightly, measured over a decade.
Note that CIC/GDP did rise to 14.4% in 2021 due to GDP shrinkage post COVID, so it’s fallen from then, but that was a one-off blip.
Why CIC/GDP has not fallen further needs more investigation, but an interesting nugget is that most UPI transactions are very low value, 2/3rds under INR 500 ($6).
It’s also worth considering the impact of internet shutdowns, which can be long and sustained. People living in New Delhi won’t realise this, but many parts of the country have experienced this. Of course UPI now has “offline mode” (Lite) but it’s limited to small-value payments.
Some of the stats above was drawn from here[1], the writer is quite well known in finance journalism circles.
[1] https://www.deccanherald.com/opinion/sorry-cash-isn-t-going-...
smartphones are necessary to pay via UPI
smartphones--bank accounts--aadhaar card
in case of some low income workers, smartphones are not universal
in case of some migrant workers (including those that come from neighboring countries in search of jobs) .. aadhaar or bank account may not be immediately available
while digital payments are definitely becoming common cash is still accepted
in some cases autorikshaw drivers either avoided UPI (because something went wrong previously and their account went into negative balance ..so any payments they accept there will be swallowed by the app) ..or sometimes ask for cash as preferred mode because for them it is easier to spend immediately (sometimes even for sentimental reasons like first ride of the day)
Cash creates a problem of giving change that end up dissatisfying the customer or the customer just leaves. Only after UPI people understood this so now they want you to buy it as payments are not a hassle. Rickshaws in cities have lost interest in random hires. I have waited 45 minutes for rickshaws. Everyone is on Uber or Ola cause they will show up and say cancel the request and give me little less money instead. Pretty common. So they don’t have the option to say no to UPI. They try to give you reasons why it’s not working but they just want cash for obvious reasons.
UPI also allows people to have multiple accounts in family to accept payments. This way they can avoid any tax payments as small amounts in small villages are not scrutinised by the income tax department.
UPI has created more and easier transactions. Small village or big town, I’ve never seen a shop without a QR code in the last year or so.
When we talk in absolutes like this, it sounds like technology worship.
I am not out here to denounce UPI or to say it is fraught with issues. Acknowledging limitations, edge cases, or the reality of some of the citizens for whom UPi is not the solution goes a long way in ensuring inclusive tech.
I am in the Silicon Valley of India and the monthly salaries I pay to household help are in cash. I would so prefer to switch to digital myself if they had that option. We can't simply deny the reality they live in because we love the new tech or the people that promote it.
The suggestion is to assume that there are people who cannot use UPI and other shiny new tech, and make accommodations for them to lead their lives, rather than push for all digital and exclude some people.
(I don't have an Aadhaar, and it works fine across multiple banks)
Aren't all banks mandating Aadhaar based KYC and freezing accounts if there is no aadhaar? Atleast I know SBI did. And even PAN to Aadhaar linkage has also been made "mandatory"...even though the legality of the mandate is dubious, and there have been many deadline extensions.
The PAN Aadhaar linkage has caused some investment issues for me.
No.
[1] UPI money transfer without Internet or smartphone; know how to do it - https://www.businesstoday.in/industry/banks/story/upi-money-...
There are areas without reliable mobile coverage... where people who need aadhaar authentication OTPs for their livelihood now, thanks to overzealous implementation of technology, are adversely impacted.
The suggestion is to assume that there are people who cannot use UPI and other shiny new tech, and make accommodations for them to lead their lives, rather than push for all digital and exclude some people.
I was just in India, and while I didn't do very many of the transactions that a resident would, I used cash for almost everything (except for supermarkets where I paid with my non-Indian credit card).
It didn't feel at all difficult to get by with cash.
Delhi != India. Cash is still very popular in India and many shopkeepers groan when I ask them to show their QR code for payment.