“Cashless” Equals Inconvenience!

Published: November 22, 2016 at 10:05 am

Last Updated on

The surge in cashless transactions since Nov. 8th is not a sign of India moving towards a cashless society. It is merely a sign of merchants making do, while situation the gets better. From what I see, the “situation” has gotten worse and is expected to be that way until the new Rs. 500 notes get into wide circulation.

When I make a cashless transaction these days, I avoid the possibility of long queues at ATMs or banks and perhaps some fringe benefits, aka cashback. But I am also shifting my inconvenience to the merchant with whom I am transacting.The merchant, in turn, could shift their inconvenience to their employees.

Consider a sudden increase in cashless payments made at a small establishment such as a bakery. The money from such transactions eventually hits the owner’s bank account. She then has to pay her employees – the baking and cleaning staff. These are real Indians – no smart phone, no internet, no atm card – who lives are peppered with small cash transactions made at small shops.

During normal times, the baker’s cash reserves should be enough for paying salaries in cash (in change, to be exact). During normal times, the bank would provide cash in Rs. 100 stacks and lower to shop owners. But these are not normal times. If the bakery is forced to go cashless in fear of losing business, the inconvenience gets passed on to the employees. And then there are people who buy a Rs. 10 cup cake, hand out a Rs. 2000 note and expect change!


A similar reasoning applies to the agency who sends a caregiver each day to look after my mother. Recently they got themselves a card machine. So I could swipe out the Rs. 15,000 or so payment that I owe them by month end. However, 70% of that money would go to the caregiver, another real Indian who problems that I do not bother to think about. How will the caregiver get paid if banks have only Rs? 2000 notes? How will agency manage to pay its employees if all their clients used their cards? Can I simply say, “not my problem” and pass on my troubles to others?

My point (which is going to met with a lot of criticism esp from younger readers) is, that a cashless society may (or may not) be a step in the right direction. However, an economic shock should not be and cannot be the catalyst for such a shift.

The real India (who will never read this) is not ready for it.  The real India is a fish out of water in an ATM kiosk. The real Indian does not know how to fill up an application form. The real Indian needs cash. Sorry, make then change.

This is the real problem. The real India has run out (or is fast running out) of change. The far-removed-from-reality Indians like me are busy calculating cashback benefits, feeling proud on social media about a digital India and do not have change. Banks have run out of change – Rs 100 and lower denominations. The good news is many ATMs are now working. The bad news is they are spewing out Rs. 2000 notes and nothing else (besides printing “cannot process” receipts).

Join our 1500+ Facebook Group on Portfolio Management! Losing sleep over the market crash? Don't! You can now reduce fear, doubt and uncertainty while investing for your financial goals! Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community. The 1st lecture is free! Did you miss out on the lockdown discount? You can still avail it! Follow instructions in the above link!

In the first week (since 8th), finding a working ATM was tough. In the second week, finding working ATMs, that provide Rs. 100 notes, is  proving difficult.

The demonetization announcement was well-timed: post-Diwali and eight days into the month. However, we only have about 8 days left in the month. However, come Dec. 1st or first week, salaries have to be paid – in cash to real Indians. Hopefully with the new Rs. 500 notes and at least a few Rs. 100 notes.  Else they are going to face the heat.

What do I care, I got me a nice wallet that offers 50% cashback. Thank God, I don’t have to stand in line. Let me go tweet about it.

You Can be Rich Too: Now at Google Play Store

Our book is now available for purchase (Rs. 244.30) at the Google Play Store for use with the free Google Play Books app.

You can also buy hardbound copies via Amazon.in (Rs. 359) or  Flipkart(Rs. 359) or Bookadda (Rs. 339). Infibeam(Rs. 307) or Sapnaonline.com(Rs. 339).

If you have read the book, please consider posting a review at Amazon.in or Flipkart or at Goodreads.


Do share if you found this useful
Share your thoughts on this topic at the  Reddit freefincal_user_forum

Reach your financial goals like a pro! Join our 1600+ Facebook Group on Portfolio Management! You can now reduce fear, doubt and uncertainty while investing for your financial goals! Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community. The 1st lecture is free!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!) or you buy the new Tactical Buy/Sell timing tool!
About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association. For speaking engagements write to pattu [at] freefincal [dot] com
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. We operate in a non-profit manner. All revenue is used only for expenses and for the future growth of the site. Follow us on Google News Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any kind of paid articles, promotions or PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)
Free android apps