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Understanding cashless payments in India

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  • Bappaditya Mukhopadhyay

    (Great Lakes Institute of Management)

Abstract

Background This paper analyzes India’s gradual transition towards a cashless economy. Methods We present a theoretical model that evaluates decisions by consumers and sellers to adopt cashless payments. We then use data from surveys conducted in 2011 and 2014 (from World Bank’s Global Findex), as well as household and enterprise surveys conducted in 2009–2010 to estimate the amount of cashless transactions prevalent in India and identify the avenues that are successful and those that are not. We analyze instruments (cards versus point-of-sale versus mobile), micro units (individuals versus households versus retailers), and sectors to identify and estimate the enablers and bottlenecks. Results We find that the most crucial enabler of cashless payments are inflows of funds into the accounts. Conclusion Based on our findings, we suggest possible policy interventions.

Suggested Citation

  • Bappaditya Mukhopadhyay, 2016. "Understanding cashless payments in India," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 2(1), pages 1-26, December.
    • Handle: RePEc:spr:fininn:v:2:y:2016:i:1:d:10.1186_s40854-016-0047-4
    DOI: 10.1186/s40854-016-0047-4
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    References listed on IDEAS

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    3. Bappaditya Mukhopadhyay & Sambit Rath, 2011. "Role of MFIs in Financial Inclusion," Review of Market Integration, India Development Foundation, vol. 3(3), pages 243-286, December.
    4. Singh, Sunny & Bhattacharya, Kaushik, 2015. "Does easy availability of cash effect corruption? Evidence from panel of countries," MPRA Paper 65934, University Library of Munich, Germany.
    5. Demirguc-Kunt,Asli & Klapper,Leora & Singer,Dorothe & Van Oudheusden,Peter, 2015. "The Global Findex Database 2014 : measuring financial inclusion around the world," Policy Research Working Paper Series 7255, The World Bank.
    6. Shy, Oz & Tarkka, Juha, 2002. "The Market for Electronic Cash Cards," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(2), pages 299-314, May.
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    Cited by:

    1. Bappaditya Mukhopadhyay, 2019. "Consumer Confidence and Lasting Effect of Demonetisation," Review of Market Integration, India Development Foundation, vol. 11(1-2), pages 54-92, April.
    2. K R Srinivasan & J Duraichamy, 2021. "A Study on Individuals Perception towards Development of Digital Economy during Covid-19 Pandemic," ComFin Research, Shanlax Journals, vol. 9(3), pages 11-15, July.
    3. Hway-Boon Ong & Lee-Lee Chong, 2023. "The effect of cashless payments on the internet and mobile banking," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(1), pages 178-188, March.
    4. Richa N. Agarwal, 2020. "The Role Of Effective Factors In Utaut Model On Behavioral Intention," Business Excellence and Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 10(3), pages 5-23, September.
    5. Mushkudiani Nino, 2018. "Development of Electronic Payments in Georgia," Economics and Culture, Sciendo, vol. 15(2), pages 64-74, December.
    6. Ibn e Hassan & Ahmed Naeem & Sidra Gulzar, 2021. "Voluntary tax compliance behavior of individual taxpayers in Pakistan," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-23, December.

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    More about this item

    Keywords

    Cashless transactions; Survey; Network effect;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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