One of the stated objectives of the Narendra Modi government’s move to demonetise Rs 500 and Rs 1,000 currency notes is to transform India into a cashless society.
Although India has been steadily going cashless over the years, more than 70% of transactions in the country continue to be in cash. A VCCircle analysis, published just days before the surprise 8 November announcement by Prime Minister Modi, showed that the number of transactions through prepaid payment instruments such as Paytm, FreeCharge and MobiKwik rose to 748 million in 2015-16, an increase of 11 times in three years. The value of transactions climbed six-fold to more than Rs 26,000 crore.
On Tuesday, Paytm said it hit the 7 million transaction mark worth Rs 120 crore, making it comparable to daily debit and credit card transactions in the country.
Moreover, if one considers mobile banking, Reserve Bank of India (RBI) data show that the value of transactions has galloped 222 times in four years to Rs 4.04 trillion in 2015-16. Having said that, some countries have already very nearly achieved this task of going cashless, thus virtually eliminating the possibility of people hoarding black money in cash. Interestingly, it is not just the developed world that’s shunning cash. Technology is enabling even countries in Africa to go cashless. Here’s a look at some such countries:
Sweden: Citing the Swede central bank Riksbank, the Guardian newspaper reported in June that cash transactions in the Scandinavian country made up barely 2% of the value of all payments. The figure, the report says, is likely to drop to 0.5% by 2020. The report also says that 900 out of 1,600 bank branches in the country do not keep cash or accept cash deposits and many rural ones simply do not have ATMs.
Denmark: The Danes are giving their fellow Scandinavians a run for their money, and could become the first country to go completely cashless. In fact, earlier this month, Business Insider reported that even homeless people in Denmark were abandoning cash, in favour of MobilePay, a mobile app that enables cash payments.
Belgium: All cash transactions above 3,000 euros are prohibited. As of 2014, 86% of Belgians had a debit card and 93% payments were cashless.
France: Like Belgium, France also does not allow cash transactions above 3,000 euros. As a result, more than 90% transactions are cashless. A CNBC report from 2014 says that almost 70% of people in France have debit cards.
Canada: With almost 90% population having a debit card in 2013, Canada stopped minting coins, saving its exchequer some money.
United Kingdom: In 2014, the iconic double-decker red buses in the city of London stopped accepting cash payments simply because there weren’t enough people paying in cash. Again, like France and Belgium, an overwhelming number of Britons have debit cards.
The Netherlands: A drive that began in 2012 has led to almost 98% population having a debit card with cash payments making up just 15% of the total transactions as of 2014. Several Dutch commercial establishments simply refuse to take cash now.
Australia: Just last week, the Sydney Morning Herald reported that Citi Australian’s bank branches were going cashless “because it is no longer worth offering a service that is used by less than one in twenty customersâ€. Although Citi has just six branches across the country, it does signal how with almost 80% population using a debit card, plastic money has taken over the country. Cash was used in 78% payments worth less than $10 in 2013, down from 95% in 2007, the report said.
Germany: Europe’s largest economy is pushing to ban all cash transactions over 5,000 euros and do away with the 500-euro note. In 2014, CNBC said that 88% Germans had a debit card and 76% transactions were cashless.
South Korea: About 60% South Koreans have debit cards and 70% transactions happen without cash. In February, the Korea Herald reported that the country’s central bank was planning to do away with coins to make the country cashless by 2020. “Under the plan, people who pay cash at retailers such as convenience stores and discount chains will receive change not in coins, but in noncash payment instruments like transportation cards, credit cards or to mobile bank account,†the report said.
United States: Eight out of every 10 transactions are cashless in the world’s largest economy, with about three-fourths of people having a debit card. In September, the Chicago Tribune said that although the US “stands at a tipping point, perfectly pitched†to go cashless, “many Americans still cling to currencyâ€.
Kenya: In 2007, the east African country saw the launch of M-Pesa, a mobile phone-based money transfer service. Although initially intended as a tool to help people pay off microloans, the services are now used by Kenyans living in cities to send money back to their families in villages. In 2013, CNBC said almost a quarter of the country’s economy was flowing via the mobile payments service. Just last week, a report by Kenya’s Nakuru News said Kenyans are borrowing more that 14 million shillings an hour using M-Pesa.
Zimbabwe: This is a country that has seen hyperinflation like no other. The economic crisis forced Zimbabwe to abandon its currency in favour of the US dollar in 2009. But Zimbabwe, though low-tech, simply does not have enough liquid cash. Earlier this month, The New York Times noted how debit card machines were proliferating in the country, from supermarkets to churches and every other business happy to accept paper cash but unable to dispense it. “If there are no card-reading machines around, many shoppers now text payments on their cell phones,†the report said.
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