15 March 2018 05:30:18 IST

Living in a cashless country

An advertisement board of Paytm, a digital wallet company, is seen placed at a roadside vendor's stall as he arranges vegetables in Mumbai, India, November 19, 2016. Picture taken November 19, 2016. REUTERS/Shailesh Andrade

With close to a billion mobile subscribers, going digital in India could yet be a pipe dream

Keeping cash is cumbersome. My wallet is usually a mess — the 10s always seem to be more interested in being mates with the 50s and the coins keep spilling over, leaving me with a sore posterior after a long drive.

Cards are sleek, don’t get worn or soiled and are extremely easy to handle. Just swipe them and your work is done. No hassle of checking if the gentleman across the counter has counted right and given you the correct change; this especially helps if you freeze, like me, when it comes to anything mathematics – counting, subtracting, dividing, et al.

I was pretty happy living in these cashless days. I asked my neighbourhood shopkeeper to get a PoS (point of sale) machine, admonishing him for being anti-national and not keeping one. Things were better at the outlet belonging to his much bigger peer. The sales executive was more than happy to take the card.

“Oh, sorry sir,” she said, almost like a jolt that woke me up from my happy slumber. “For card payment, the bill should be at least ₹500,” the executive added with a sorry face.

A bit shaken but not lost, I handed her the only currency in my wallet — the crisp ₹2,000 note that is the light to all that is black in our lives nowadays. “Oh, sorry sir,” the salesgirl went off again. Now what? “We accept cash only for transactions above ₹700,” she said.

Maybe I should go back and retract my statement that I was pretty happy living in these cashless days.

I ate another piece of humble pie earlier this week. On Tuesday morning, after cyclone Vardah had created havoc and the whole city was without electricity, I went to the neighbourhood shopkeeper to buy some urgent supplies. As I handed over the money, he smiled at me. Did the smile mean “So sir, would your PoS work without power?”?

The many roadblocks

Even as the demonetisation narrative shifts from black money to cashless economy, there are quite a few reality checks. In Chennai, Vardah might have prevented the cashless economy from working. But even without an act of God, going cashless in India is a monstrous task.

Though Prime Minister Narendra Modi, in August, said that all the villages in the country would be electrified within 1000 days, the definition of electrification means that not everyone will have access to a consistent supply of power. Lack of power would render all the gadgets and machines, including phones and PoS machines, unreliable mediums for making transactions.

As for the PoS systems, small retailers like my neighbourhood shopkeeper can’t be solely faulted for their hesitance in embracing the new machines. Faced with huge orders after the demonetisation announcements, the makers of these machines — there are essentially two — are unsure about the delivery timeline . It can take up to six weeks for the new orders to be met.

Some have looked beyond the borders to take solace. Kenya and Somalia have been the unlikely trailblazers when it comes to turning cashless. But it won’t be wise to expect a repeat in India as conditions are different. In Somalia, as this report says: “decades of horrific civil wars have destroyed the banking sector and the rise of mobile phones has removed credit and debit cards from the equation.” The circumstances in India couldn’t be more different.

And in Kenya, says this CNBC report : “Three conditions made Kenya particularly fertile ground for M-Pesa (mobile phone-based money transfer, financing and microfinancing service): high penetration of mobile devices; a killer application — namely, a cheap and simple solution to sending money home; and the presence of a dominant mobile carrier.”

In India, even though there are nearly a billion mobile subscribers, not even half of them use their handsets for internet. That makes it virtually impossible for the whole chunk at the bottom of the pyramid to become a part of the cashless economy; and as is clear by now, they are the ones that have been hurt the most by the demonetisation drive.

In the case of applications and mobile service providers, there are so many of them in India that becoming one dominant force in their respective sectors can only be a pipe dream.

The same could also be said of the cashless drive.