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Go Cashless in your household expenses

Entire India reeled under the sudden surprise and shock when the demonetisation move was announced by Prime Minster Modi. After the initial surprise people have now started exploring various digital payments options for their daily transactions. The demonetisation move has resulted in a massive cash crunch, thus affecting our day to day lives. A society wherein more than 80% of all transactions were in the cash form, have no other option but to move to a cashless option.

India is a cash intensive economy. Moreover things have become more difficult as more than 85% of the total money in circulation was in Rs500 and Rs1000 notes. In this changed scenario, let us understand how well we can adapt ourselves.

Some important points to be understood in the digital payment scenario 

Digital wallets

Though Digital wallets have been around for more than 5 years now, because of the government demonetisation move, it has suddenly come into the limelight. E-wallet or digital wallet is an app installed on your smartphone which stores funds in a digital form rather than in a physical form.

Currently we have telecom companies like Airtel, Vodafone etc. and also third party providers like Paytm, Oxigen, Mobikwik etc., providing this service.

Some of the benefits of e-wallets are listed below:

  • Most of the e-wallets are one click payments.
  • Installation of mobile wallets on smart phones is easy.
  • You can use mobile wallets for paying utility bills, booking tickets, paying bills at restaurants etc.
  • Loading of money can be easily done through net banking or debit cards. There is generally no charge on these money transfers.
  • Many companies have tied up with different e-wallets to make life easy for their customers. For e.g. Paytm has tied up with Uber.
  • All e–wallets are not the same. You need to choose an e-wallet which has partnerships with merchants, with whom you transact regularly.

Household budget

Most of us will now have to go to super markets to buy our groceries. Though the government has said that the transaction charges on all digital transactions will be waived off, there is still no clear cut guidelines on the same. The vendor has to pay on each Point of Sale (POS) transaction and the vendor in turn passes these charges to the customer.

Secondly, the price of most of grocery items in super markets, malls and online groceries are higher than your local supplier, so this will also add into your household expenses.

Opening Bank accounts for your maids

It would be ideal to open a bank account for your maid and transfer their salaries to that account. Moreover try to get your vegetable vendor, fruit vendor, medical stores and daily grocery vendors onto the digital wallet system for easy transfers.

I have personally started educating and getting our local vendors and suppliers for day to day items, onto the digital wallet system and I must say that it has been a success.

Travelling

Many people travel in buses, rickshaws and trains wherein you don’t see many digital wallets. Only app based taxis which are expensive, have a digital wallet payment facility.

However, many auto rickshaws have now started accepting payments through digital wallets.

Eating out in restaurants

Many small restaurants or roadside eateries don’t accept digital wallet payments. It will be very difficult to pay for a tea costing Rs.10 or pay for a snack which cost only Rs30 via digital wallets. Most of them will insist on cash payments, as they require immediate cash to survive. In order to survive in their business, people are more and more exploring the digital payment option. Many restaurants and retailers have started using this facility.

Internet connectivity

Almost all digital transactions need good internet connectivity and better POS terminal connectivity. People were not able to swipe their cards as the entire connectivity was over stressed due to the sudden surge in the volumes, owing to demonetization. Moreover internet connectivity is not very good in rural areas, which comprises more than 70% of the Indian population.

Though, it seems like it will take a lot of time to go completely cashless, it is definitely the beginning of a new era. We need to build adequate infrastructure and resources in rural areas to maximise the benefits of a cashless economy. Research has indicated that the volume of cash transactions has gone up but the value of cash transactions has gone down. This means that cash is still the main and preferred mode of payment for small cash transactions.

We hope the above will give you a good perspective as you make the transition to cashless payments in your day to day life.

Please check our earlier article How to go Cashless.

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