Simple how-to articles and free tools for financing your goals, managing your money, mutual fund and stock investments

Comparison: Options Available For Cashless Transaction

In this post, Anish Mohan discusses various options available to us for making cashless transactions. As always, Anish immediately responded to my request to write this article – a suggestion by Dr Ramesh Mangal. Thank you, Anish.

This is Anish’s fourth post at freefincal. Do check out the links to the other post at the end of the article.


In the backdrop of the surgical strike on Fake Indian Currency Notes (FICN), Rs.500 and Rs.1000 denominated bills have been withdrawn on midnight of 9th Nov. The next day, the honourable Finance Minister Shri Arun Jaitley has nudged all Indians to move to a cashless economy. The word cashless and economy said together first sounds like an oxymoron. However, they are possible and can be implemented with various degrees of patronisation towards various demographics of people. Surely a digital wallet is well adaptable to a Gen Y person in an urban setup compared to grocery shop owner in a rural town. But, insurmountable it may seem, I strongly believe, it is possible and I had always dreamt of it.

To demystify the oxymoron cashless-economy, let us first look at the various types of “Legal Tender”. A “Legal Tender” is a medium of payment recognised by a legal system to be valid for meeting a financial obligation. (Source Wikipedia). Now any such obligation, if satisfied, without an exchange of cash, is a Cashless Society. Refer to Wikipedia on Cashless Society  for a good read on it.

So, coming back from all the esoteric talking, let’s see the available options such that a legal tender can be satisfied without any CASH exchange.

  1. Credit Card
  2. Debit Card
  3. Prepaid Card
  4. Netbanking
  6. IMPS
  7. United Payment Interface (UPI)
  8. Digital Wallet

For the benefit of readers, I would refrain from crowding this post with individual definition, there are numerous posts to explain them. I would rather try to make a comprehensive comparison so that the user may decide the possible option depending on various situations. I hope that by the below factual comparison, the reader or the user shall be able to exercise discretion of merits and demerits depending on his behavioural traits.


Click to enlarge. You can also download the article word file to see the table better.

I have generally used all the above payment methods for various purposes. Like people who are on my payroll i.e. Driver, Maid, Babysitter, Cook, Gardener, Sweeper et al are paid via NEFT. I use UPI when I am required to align my account balance on a Saturday/Sunday or Holidays as NEFT is non-functional. However, when it comes to paying in Uber, Utility Bills, Bigbasket or Swiggy, it has to be Paytm due to cash back.

Disclaimer: Please do not construe my last statement as promoting Paytm by any margin and it is incidental that I use this Digital wallet. There are other digital wallets and I have not tried them yet. You can choose anyone which you are comfortable with.


Payment by Cheque

I would like to add that cheque payments are still a good way to transact without cash in exchange for some services.

Guest Posts by Anish Mohan

Reader Story: Arise, Awake and DIY!

How to buy and sell direct mutual funds using MF Utility Portal

Never Hold Mutual Fund Units in Demat Form!

Subscribe and join the freefincal Youtube community!

 Don't like ads but want to support the site? Subscribe to the ad-free newsletter! 
You will get the full post-ad-free delivered to your inbox for Rs. 3000 a year. Follow this link to read the terms and sign up! 
Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media

Do check out my books

You Can Be Rich Too with Goal-Based InvestingYou can be rich too with goal based investing

My first 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 customg solutions for your lifestye!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 want My second 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 youngearner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover 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 ₹199 (instant download)

Create a "from start to finish" financial plan with this free robo advisory software template

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

About Freefincal

Freefincal has open-source, comprehensive Excel spreadsheets, tools, analysis and unbiased, conflict of interest-free commentary on different aspects of personal finance and investing. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. We do not accept sponsored posts, links or guest posts request from content writers and agencies.

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.
Updated: November 13, 2016 — 10:48 am


  1. PayTm charges 4.17℅ for transferring money from wallet to bank account. It’s daylight robbery.

    1. Yup! I was going to write about this in a separate post.

  2. The Article is good. Can you please create an article for comparision of the Digital Wallets.. We need better wallets in terms fo facilities as well as transfer to bank account. The charge should be minimum.

  3. Cash is anonymous. Most aspects of our life are already tracked. Going all-digital would also mean every aspect of your spending habits will be tracked. We do not have very strong privacy laws in this country. I would personally feel very uncomfortable if we are forced to go all-digital. Cash should always be an option.

    1. I use cash when I can and I agree with you. Gen X,Y,Z think differently 🙂

  4. if PIN is comprised for a debit card, that transaction can also be disputed like a credit card and the money can be recovered. Though it might take more than in case of credit card.

  5. For KYC customer it is 1 %
    “customers & merchants that had completed their KYC could send money to bank at 1% without any waiting period. Customers & merchants that had not completed KYC had to pay a 4% fee “

  6. Paytm announced that it is 1% for everyone after demonetization. See their blog.

Comments are closed.

freefincal © 2019 Frontier Theme