(Forbes)– It seemed to come from nowhere. Out of the blue, Narendra Modi, the Prime Minister of India, declared that 89% of the currency currently in circulation within the country, consisting mostly of paper notes valued at 500 INR and 1000 INR, would be taken off the streets.
People across the country would have a limited time to get their old currency notes exchanged for new ones at the bank, after which, they will be declared obsolete. The decision came from thin air, sending the nation’s population into a flurry of panic. It was an underhand tactic meant to get rid of counterfeit currency being used to fund terrorist operations within the country. But it quickly developed into something more.
In the course of this policy, the administration soon realized that the only way to permanently end the scourge of counterfeit money was to go cashless as a nation, which was no easy feat, considering the fact that about 90%-98% of all financial transactions in India involve physical cash.
The policy was rushed and the execution was a disaster. Many people fell seriously sick or even died waiting long hours before cash dispensers in the middle of the fiscal deficit. If ruthless demonetization was a goal, it had certainly been successful, with scarily dictatorial implications.
A year from implementation, however, with most of the initial chaos dissolved, the government is looking for ways to turn this endeavor into something productive. But can a digitalized cashless society help solve the woes of a feudal economy?
The first step to a digital economy was the implementation of a computerized identity proof. The government did this by implementing the launch of a new biometric identity card. Project Aadhar, which was initially launched in 2009, reached its peak time in 2016, when about 95% of the nation’s population had a digital identity proof.
Aadhar opened up a lot of new doors for the nation’s economy, as the implementation of a proper identity system meant that people could now open a bank account, buy a mutual fund or apply for a driver’s license with nothing more than a fingerprint. The government now looked towards digitalizing the entire banking system as a whole.
By encouraging the use of mobile wallets such as PayTM, PayUMoney and Citrus Pay, the government has been quietly trying to discourage people from the use of traditional nationalized banks and switch to electronic wallets instead.
In response to the government’s endorsement, these mobile wallets, too, have introduced their own banking systems that allow users to send, receive and store money with interest. If you were to just look at the statistics, it would appear that Project Cashless India is going nicely.
But take a broader perspective, and you’ll see that a greater part of the population continues to depend unilaterally on physical cash, making the achievement of a cashless society a long road ahead.
India, however, is only new to the game of cashlessness in Asia. Countries like Singapore, Indonesia and Thailand have been fighting this war for a long time and are therefore much farther ahead in the race. Thailand’s PromptPay, a new initiative launched by the government’s national e-payment scheme, has already received fourteen million registrations.
Singapore, with its huge technical prowess and technically literal consumer base, is strangely a rung below the others in this race, particularly because people in this city show a strange distaste for digital payment options for reasons unknown. Still, with the nation’s government-driven ferociously towards the creation of a smart nation, the country is still miles ahead of India, as services like Apple Pay and Bitcoin are widely used to pay for goods and services, while every decent hawker in the street as a feasible QR Scanner at the ready.
When it comes to the acceptance of new technology, Japan is probably the most advanced nation in the entire continent. In the country where bullet trains dot the streets and domestic robots are the norm, however, people seem to have developed a strange phobia for credit cards. What causes these cautious spenders to drift away from the craze for plastic money is the idea of overspending, although that doesn’t quite mean that the country hasn’t made great progress in going cashless.
Instead of credit cards and plastic money, it is electronic payment systems and mobile wallets that have gained popularity amongst the island nation’s careful consumer base. There’s a clear reason behind this widespread acceptance too. Most electronic payment systems operating in Japan are of the prepaid variety, meaning you can only spend as much money as you put in, eliminating the fear of overspending.
Taking into account the huge public acceptance of electronic payment systems and digital cryptocurrencies, the Japanese government is launching its own national cryptocurrency, known as J-Coin, just in time for the Tokyo Olympics in 2020. It might just become one of the very few nations to have a national cryptocurrency.
Japan is hardly the only nation to be taking advantage of the cryptocurrency craze. Countries like Israel and Venezuela are also considering launching their own national cryptocurrencies. In Asia, a number of different privately-owned blockchain systems are also aiming to bring digitalized payments to the continent’s unbanked.
By tapping into the huge smartphone acceptability throughout the world, Telcoin is a new financial ecosystem that is partnering with telecom providers from everywhere to create a mobile wallet that makes it safer and easier to transact in small and large amounts of money.
While Telcoin is an inclusive financial ecosystem available globally, its particular focus right now lies in South-East Asia, where it’s trying to bring back 438 million unbanked people back to the economic fold. Built on the robust yet secure ethereum network, Telcoin boasts the strength that comes with a name we trust. Financial inclusion is the birthright of every world citizen, says TransCrypt CEO Nick Machulis, whose universal payment system based on the blockchain is working towards similar goals.
By combining leading services like Telegram and Blockchain, TransCrypt is trying to develop an inclusive ecosystem that makes sending and receiving money a breeze. Over two billion people across the world are yet to have a bank account, while the number of people who own smartphones spans five billion.
By building from scratch a decentralized global financial ecosystem regardless of nationality or income, UbiquiCoin is trying to help the huge number of unbanked individuals in underdeveloped and developing nations in much the same way. You can read their entire whitepaper here.
Digitalized money is not all pomp and no substance. There exist a number of physical benefits to replacing actual cash with e-payment systems. The one that’s by far the greatest, is convenience. Carrying around fistfuls of cash or plastic cards in the dozens can be a huge headache, while digitalized payment systems provide an easier alternative to this trouble.
The alternating disadvantage is the need for technical know-how, although, considering the fact that most people in the world own at least one smartphone, this shouldn’t be a very difficult task. When using an e-wallet, every single transaction performed is logged into an online ledger, making it a lot easier to plan budgets and secure refunds when transactions go awry.
There’s also the added advantage of having a way out in case your smartphone gets stolen, although the higher chances of identity theft and hacking do well to make people think twice about using these platforms.
Let’s face it. Printing paper notes by the billions is a resource and time-consuming affair. It also makes it really difficult when traveling outside the country, something which a lot of people tend to do in today’s globalized economy.
A unified payment system that spans multiple countries and makes sending and receiving money a breeze would make things a lot more easier. It would also be a boon for developing countries with struggling economies. Now the only question that remains is whether we’re willing to take the risk to secure the advantage.