CONSUMER BEHAVIOR TOWARDS CASHLESS TRANSACTION IN INDIA

Abstract

A cashless transaction in India is an effort to move towards a cashless economy by minimizing the use of physical cash. The main objective of the study is to present the current status of India in usage of digital currency in comparison to other developed countries and find the challenges and opportunities which are associated with the cashless transaction in India. The findings of the study revealed that the introduction of cashless economy in India can be seen as a step in the right direction of economy growth and development. It has been conducted to unravel the challenges and opportunities of cashless economy by promoting electronic money instruments, developing electronic financial infrastructures and spreading digital transaction habits among people.

There are many substitutes for cash in the modern economy ranging from debit cards, pre-paid cards, credit cards and mobile wallets. When compared to cash, these instruments differ in several key characteristics. Temporal separation or degree of coupling is the extent to which a purchase and the payment for the transaction from resources are separated in time. If the two are de-coupled, people may not perceive a sense of separation from money at the time of incurring the expenditure and hence may overspend. In a comparison of debit cards with cash, studies suggest that with the use of debit cards, the level of consumption tends to be higher. In a comparison of credit cards with cash, this effect is more pronounced. Credit cards often are associated with more spending resulting in an increase in debt as well. The demonetization undertaken by the government is a large shock to the economy. The impact of the shock in the medium term is a function of how much of the currency will be replaced at the end of the replacement process and the extent to which currency in circulation is extinguished.