by Analytics Insight
January 5, 2022
As the concept of money changes, so does the nature of payment methods in India.
“Money makes the world go round,” the saying goes, and it is valid to some extent; that’s very little you can do without exchanging money these days. Over the years, the way people pay for goods and services has changed. There are many forms of payment that do not require physical money. For the most part, one can buy, sell and transact without ever having a euro, pound or rupee in hand. From card payments to services like Google Pay, we now have the option of not carrying cash or coins.
On closer inspection, specific industries would not exist if there were no monetary alternatives; take iGaming. For example, online bets are made through online payments; it would not be possible if the technology did not exist. AT deposit with Astropay Card at 10CRIC takes less than 10 minutes and all it takes is your phone, simple, right? Sometimes we take these things for granted because they haven’t always been.
The evolution of money
No one can determine the exact time of the invention of money; some scientists and economists speculate that around 5,000 BC had started to exist.
Before that, the world operated on a barter system where livestock or fresh produce was traded. If someone needed potatoes but had chickens, they would trade a chicken for a bag of potatoes.
Over time however, bartering was not possible due to the issue of supply and demand, this is where commodity money came from. It was the exchange of essential items that everyone needed and used, like tea, salt, cattle, and seeds.
Once the exchange of goods became too heavy due to storage or transportation issues, people forged silver from precious metals such as gold and silver. This made it more accessible as there was now a defined value to trade with.
Eventually, around the 1800s, paper money was made and legalized in the early 1900s.
India and Cashless Push
As countries around the world push for digital transactions and cashless payments, India is joining the massive cashless exodus.
In 2016, began to demonetize its currency by withdrawing from circulation the banknotes of Rs 500 and Rs 1000; According to the Prime Minister, the objective then was to limit the impact of black money and help push India towards a cashless economy.
While the motive may have been good, what politicians forgot to look at was the country’s informal sector, which made up 93% of the workforce. The push towards cashlessness or digital money would not benefit the poor.
As in most developing economies, those who live below the poverty line still operate in cash and bypass the banking system completely, and expect them to go digital and cashless and fail to do so. not even owning a cell phone would be unfair.
A simple example would be the recycling industry, where collectors pick up trash and throw it home for sorting, from paper and glass to hair used for wigs or stale bread to make animal feed. Once sorted, they packaged it and it was weighed by the buyers, who then calculated the value of the items and would pay the collectors in cash. Buyers would then do the same when they sold to processing plants.
Plastic and digital currency
In theory, a cashless society is more secure from theft, and even if your cards and phone have been stolen, biometric checks and other security measures are in place to protect your money.
When more people pay by card or over the phone, retailers have less money in the bank and even less to keep on their premises. It is also convenient for their customers to have different ways to pay for their items.
Digital payments and other forms of cashless payments are also contributing to the decrease in black money in circulation.
Popular payment methods
It is the most convenient way to transact, whether in store or online. Some online stores in India offer customers discounts if they pay with a credit or debit card. In 2017, the percentage of people over 15 with a credit or debit card was 32.72%. In 2020, there were over 860 million active debit cards in the country, with just over 60 million credit cards.
Payments through PayPal offer convenience and flexibility. In April, however, Paypal announced that it would no longer facilitate domestic payments within the country. Despite this, Paypal remains a popular payment method, especially among companies that do international business.
Paytm is a mobile wallet payment method with an account linked to the user’s app. You can shop there, pay utility bills, and send money. It supports over 70 foreign currencies and does not impose any transaction fees for start-ups.
This payment method allows businesses and individuals to send and receive money across India. Even unregistered businesses can make and request payments. There is an invoice generator on the app and customer support is available 24/7.
On this app, you generate a payment link using cash gram, businesses send links to their customers for payment, and the customer clicks the link to make payments. Some of its features include instant refunds, bulk payments, and recurring payments.
It is a user-friendly and flexible application popular in India especially for young people. It is mainly used to make online payments for videos and music. It allows businesses to receive payments from customers on social media platforms like Instagram, Facebook, and Whatsapp.
Other payment methods like Apple Pay, Google Pay, and Samsung Pay are used and accepted at all major franchise and retail stores. There are some limitations, some regions do not have the functionality, and some customers do not have suitable mobile devices.
People are wary of digital payment methods mainly due to the rise in online scams, identity theft and cybercrime.
The future is cashless and certainly more digital; the best we can do is to arm ourselves with knowledge and always act with caution.