India Embraces Digital Payments Over Cash, Even for a 10-Cent Chai The New York Times

In 2019 mobile payments reached TZS 88.1 trillion or an increase of 283.2 percent (Figure 1). When it comes to card-reader dongle apps, Square is by far the most impressive and popular within the niche market. Simply by inserting a tiny card reader into the headphone jack of your tablet or smartphone, you can turn your device into a cash register and accept card payments (sorry for the iPhone 7 and above users, the headphone jack is sorely missed).

Once the amount of currency related to the underground economy is estimated, it could be multiplied by income velocity of money to get a measure of the size of the underground economy (Schneider & Bajada, 2005). In national income accounting approach (Lyssiotou et al., 2004), the size of the underground economic activities is assumed to be the residual and the analysis focuses on the difference between the legitimate income and expenditure. Important assumption underlying this approach is the behavior of velocity of money. For more information visit here

Tokenization creates a unique randomized set of numbers to be used at each new transaction, so your real card number is never used from your phone. Samsung Pay lets you carry your credit, debit, gift and membership cards on your devices. This article presents insights from African experts along with our analysis of what is driving the growth of e-payments on the continent (see sidebar, “Our perspective”). It highlights the challenges and possibilities for organizations looking to find their niche in this rapidly evolving and increasingly competitive landscape. Before the pandemic, Mr. Srivastva pasted a QR code on the inside of his rickshaw, but since only a quarter of his payments were digital, they remained an afterthought. As the system has become embedded in Indian life, the concerns over data privacy have not fully receded, even after Supreme Court rulings governing its use.

Spend any time on a college campus and you are bound to hear things like “I’ll Venmo what I owe you for dinner later,” or “Let’s Venmo the drinks bill between us.” Venmo lets you send money using mobile numbers, email addresses and even Facebook accounts. Although mobile money may not be the silver bullet to complete financial inclusion so far, it has brought banking to millions of people, especially in rural areas. For the poorest of the poor, since they do not have much money to begin with, mobile money may not be the best solution as microfinance may work better. However, with continuing innovation in technology and services, there is no doubt that mobile money or other ways towards financial inclusion will reach the poorest of the poor.

Investors could consider constructing portfolios of players that collectively address systemic challenges as an alternative to the individual selection of target players that do not always have obvious complementarities. Heptagon Capital Limited is licenced to conduct investment services by the Malta Financial Services Authority. Amitabh Kant, one of India’s top coordinators for the Group of 20 events, said the government had struck the right balance between privacy and innovation.

Despite these constraints to mobile phone payments, the adoption rate for mobile payments is growing along with technological advancements. Most responded indicated that there has been an increasing trend of payment receivables on goods and services from mobile phone transactions (Figure 13). Nonetheless, these findings do not support the belief that the overall demand for cash holding should decline overtime as the mobile transactions gain pace. This is due to other factors operating in the opposite direction as accentuated by the coefficients of real income and inflation. Real income (both recorded and unrecorded) appear to be the main driver of the demand for cash holding in Tanzania.

In addition to obtaining information on payment behaviour and the underlying motives, the survey also dwells on understanding of the use of cash by the population. The survey information helps to answer questions of interest such as, what role does cash play for the households, and what motives lie behind its retention? Stix (2004) study involved surveys conducted to individuals and their payment habits in Australia. He finds that those individuals that make purchases frequently with debit cards on average hold 20 percent less cash in their wallets and those that frequent ATMs hold 18 percent less cash in their wallets. For France, Bounie & François (2006) find that transaction size, type of good and where the purchase is made are key factors for the consumer choice of a payment instrument.

The creation of industry utilities, which we discussed earlier, is a practical option for banks looking for ways to create scalable platforms out of their existing infrastructure and networks. As real-time payments infrastructure continues to develop, it is likely that accounts will get increasingly integrated into wallets in key countries such as Kenya and Nigeria. Despite improvements in real-time payments infrastructure, low bank account pene­tration and stricter KYC requirements will limit account-based payments.

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