CASHLESS SOCIETY MBA

INTRODUCTION

Nowadays, money determines the social status of an individual. Was money always a determinant? If
we go back to the primitive age of human history, people had no money. They merely had some stone tools for
hunting and gathering food. As families started settling down in villages, the need for various commodities
arose. Then the barter system came into existence, where goods and services were being exchanged. Whatever
one needed would be provided by the other person in exchange of the goods and services that the other person
would need. That was a content life, followed by the metallic age when the coins started to be minted. People
realized the importance of the shiny golden coins. Currency notes were introduced by China in the 7th century
and thereafter these were used all over the world. People no longer needed to carry heavy bags of grains in case
they needed a pair of shoes. They simply had to pay a few coins and notes. After the evolution of a banking
system, for many decades, coins, notes and cheques were the key instruments for money transactions among
customers and companies. Usually, customers kept these physical currencies in their wallet, although sometimes
it was not feasible to keep all the money in their possession for an expensive purchase. Gradually money
became a measure for everything. With money, one is a dragon; with no money, a worm. Capitalism crept in
and people started becoming a rich man’s opportunity. Also, with physical currency (coins and notes), several
evils arose. Burglery, robbery, bribery and fraud are examples of misconduct and crime. To safeguard
ourselves, neither can we return to the barter system nor can we do away with money. How, then, can people
protect themselves in this digital age? The answer is ‘with the help of technology’, by developing a ‘Cashless
Society’. We are all moving fast in the direction of a digital generation where ‘paper’ work will be obsolete.
Oman is a good example of this, where more than 66.6 percent of data is available online (United Nations,
2014). Here, every sort of organization, big or small, is keenly motivating everybody to move towards living
without cash.

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E-BANKING

Introduction:-

Banking has always been the backbone of any economy. It often works as a bridge between customers
and companies. In the past, the banking system was totally dependent on human knowledge and skills to
perform basic functions such as journal entries, ledger posting and trial balance preparation. Earlier bank
transactions were very slow due to the manual systems and in order to improve operations, later on banks
started the process of computerization.

Meaning:-

Electronic banking has many names like e banking, virtual banking, online banking, or internet banking.
It is simply the use of electronic and telecommunications network for delivering various banking products and
services. Through e-banking, a customer can access his account and conduct many transactions using his

computer or mobile phone.

History of E-Banking :-

First conceptualized in the mid-1970s, some banks offered customers electronic banking in 1985.
However, the lack of Internet users, and costs associated with using online banking, stunted growth. The
Internet explosion in the late-1990s made people more comfortable with making transactions over the web.

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Advantages of E-Banking:-

 Round the clock banking.

 User friendly.
 Low cost.
 Portable banking.
 Quality banking.
 Speed banking.

Limitations of E-Banking:-

 Start-up cost.
 Training & maintenance.
 Security.
 Legal issues.

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Functions of E-Banking:-

1. Pay a bill :-

Electronic bill payment service allows a depositor to transfer money from his or her online

account to a creditor or merchant.

2. Schedule payments in advance:-

Most banks recommend clients the ability to schedule a payment on a particular date. Once the
amount is entered and the payee is checked off, the funds are automatically deducted from your online bank
account. 

3.Transfer Funds :-

  you can make money transfers between your own accounts, or send money to a third party
account as well. All you need is recipient/payee information and enough funds in your account. Quite often, the
operations are performed in real time.

4. Manage all your accounts in one place :-

Online banking is an enormous time saver because it provides a chance to handle a number of bank
accounts (checking, savings, CDs, IRAs, etc.) from a single site. Most new accounts you open will be
automatically added to OB (Online Banking).

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5. Apply for a loan or credit card :-

By using an account online, you can apply for a credit card or a loan (a car loan, a student
loan, a mortgage, a home equity loan, etc.) from the same bank. If you have a good credit score and long
relationship history with your bank, your application is likely to be accepted.

6.Track your payment history :-

Online banking provides an opportunity to look for your payments by transaction type, date,
description or amount. When did you last pay Company X? When did you buy your computer? To whom did
you make your most recent payment? Your bank knows the answers. 

Process of E- Banking :-
 First you need to register your bank account with net banking facility.

 After that, you will get a Customer ID (User ID) and password.

 Log on to the bank portal using user id and password. ...

 Do the required transactions using computer and mobile..

 Log out the session.

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E-cards (smart cards)

Meaning:-

A smart card, also called chip card or integrated circuit card is a type of pocket-sized card with
embedded integrated circuits which can process data. ... The card data is transacted via a reader connected to a
computing system. Smart cards improve the convenience and security of any transaction.

Working process

Smart contact cards work by inserting it into a card reader and with the contact pad bearing a memory
chip where information is being stored, the card reader can read whatever is written on the card and allow the
user perform any transaction he intends doing.

Types of smart cards

1. Debit card
2. Credit card

1. Debit card:-

Debit cards allow bank customers to spend money by drawing on funds they have deposited at the
bank.

2. Credit card:-

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Credit cards allow consumers to borrow money from the card issuer up to a certain limit in order to
purchase items or withdraw cash.

Advantages of Smart Cards

 Larger memory.
 High levels of security.
 Reduced fraud.
 Organized information.
 Reliability.
 Upper management information.
 Information Security.
 Ease of use without need for connections online or via telephone.
 User comfort.
 Privacy

Disadvantages of smart cards

 A more powerful virus.

 Discomfort to retrieve information from a stolen card.
 For its size can be easily misled.
 The card must be recharged.
 Increased cost of production.
 Dependence of electrical energy for use.
 Vulnerable to fluids.
 Bank fees associated with credit card.
 We need a smart card reader.

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E –WALLET

Definition:

E-wallet is a type of electronic card which is used for transactions made online through a computer or a
smart phone. Its utility is same as a credit or debit card. An E-wallet needs to be linked with the individual’s

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bank account to make payments. . The main objective of e-Wallet is to make paperless money transaction
easier.

E-wallet is a type of pre-paid account in which a user can store his/her money for any future online transaction.
An E-wallet is protected with a password. With the help of an E-wallet, one can make payments for groceries,
online purchases, and flight tickets, among others.

Working process

E-wallet has mainly two components, software and information.

Software component stores personal information and provides security and encryption of the data
whereas information component is a database of details provided by the user which includes their name,
shipping address, payment method, amount to be paid, credit or debit card details, etc.

Procedure

 Download the app on your device.

 Sign-up by entering the relevant information. The user will receive a password.
 Load money using debit/credit card or Net banking.
 After shopping online, the e-wallet automatically fills in the user's information on the payment form.
 Once the online payment is made, the user is not required to fill the order form on any other website as the
information gets stored in the database and is updated automatically.

Examples of e wallet applications

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 Phone pe
 Google pay
 Paypal
 Mobikwik
 Paytm
 Bhim

Phone pe

Steps To Get Started On PhonePe App

1. First, Download and install the PhonePe App.

2. Verify your mobile number. Standard SMS charges apply.

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3. In case you own a Dual Sim smartphone, select the SIM that is linked to your Bank account.

4. Enter Name, email and set your 4 Digit password and activate your wallet.

5. Proceed to the next step and click on Create New Virtual Payment Address (VPA). VPA is a unique identifier
to identify you.

6. In the next step, you have to select your Bank, and the app will automatically fetch the details.

Important: Your mobile number with Phonepe and the one registered with your bank account should be same.

Features of the PhonePe App

• Send, Request Money from friends/family by entering their number, name or Virtual Payment Address(VPA).

• Recharge your

– Mobile

– Data Card

– DTH

– Pay Postpaid Bills

– Landline

– Electricity

– Gas Bills.

• Check your bank account balance

• Net banking, Debit & Credit card top up not allowed.

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• You can withdraw wallet balance instantly to your Bank account.

Paytm

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Introduction

Paytm ("Pay-T-M", pronounced

similar to ATM) is an Indian e-
commerce payment system and
financial technology company,
based out of Noida, India. ... As per
the company, over 7 million
merchants across India use this QR
code to accept payments directly
into their bank account.

create account

1.download the paytm app in your

mobile or pc.

2.To sign up option choosing.

3.To give your mobile or gmail id.

4.Create paytm password.

5.Created your paytm account.

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login the paytm

1.Open the paytm app.

2.Select Login option.

3.Enter your paytm account mobile or gmail id.

4.Enter your paytm password.

5.Paytm login is successfully login.

features

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Mobile recharge

 DTH recharge

 Data Card Recharge

 To book Air tickets and Taxis

 To pay
for fuel at
Indian Oil
petrol pumps

 Landline
Bill Payments

 Electricity Bill Payments

 Gas Bill Payments

 Buy pay movie tickets at PVR cinemas Through the wallet

Google pay

Introduction-
Google Pay is a digital wallet platform and online payment system developed by Google to power in-app and
tap-to-pay purchases on mobile devices, enabling users to make payments with Android phones, tablets or
watches.

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Procedure of setting up the account

 Enter the phone number.

 Sms will be sent to the desired bank in order to get upi access.
 Fresh UPI is created then linked it to google account.
 Set the google account as default.
 Enter UPI PIN for the asked bank in smartphone.
 Finger print option is also provided.

Sending the money in google pay application

One can receive and send the payment by clicking payment tab.

Following option has to be filled.

 Account number.
 IFSC detail.
 UPI(unified payment interface).
 Scan QR code.

BHIM

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Introduction
BHIM is a mobile payment App developed by the National Payments Corporation of India, based on the
Unified Payments Interface. developed by national payment corporation of India. BHIM is a digital payments
solution app based on the Unified Payments Interface (UPI). Launched on December 30, 2016. BHIM app is
intended to facilitate e-payments directly via banks and simplify cashless transactions.

Features of BHIM

 Send Money
 Request Money
 Scan & pay
 Transaction
 Profile
 Privacy
 Bank account

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Merits

 Government-backed up App:- app is backed by the government of India

 Authentication & Security:- three level authentications, which makes it more secure option

 All In One App For All Bank Accounts: if a user has bank accounts in 3-4 UPI enabled banks,
and then BHIM will join all his banking functions

Demerits
 App cannot be used for any kind of online payments.
 Only KYC verified accounts can be used on this app.
 No dedicated customer care.
 Daily Transaction limit.

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MERITS
 The sites where e-wallet services are available generally have the following few easy steps to get started.
 Ease of use without having to enter your debit/credit card details for every online transaction.
 Instant cashless payment, no need to swipe a credit card or debit card.
 They also provide option for securely storing your Card details, thus providing you additional security at
the same time reducing your work to type in Credit or Debit Card numbers each time you intend to
transact online.
 For some sites there is no minimum amount and you can deposit an amount as low as Rs 10.
 Get reward and discount offers on every purchase using wallet.
 Get extra cashbacks for every amount spent using wallet.
 The money will be refunded in case of failure in the transaction.
 You can pass on the benefits of your e-wallet to your friends and family as well. There is no chance of a
decline of payment since e-wallet is a prepaid account.
 No need to access your bank account for making e-payment.

DEMERITS
 Companies must ensure that their customers' information is encrypted and well protected. One of
the biggest concerns of adopting a digital wallet application is "will my information be safe"? This is
the hurdle that companies must face and as a result, must develop security systems that are as safe
and full proof as possible to avoid potential security issues.
 You cannot redeem your money back from the wallet you need to make purchase to use this money.
 If you lose your mobile your wallet is lost.
 You can use wallet till your mobile battery lasts.

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 It may be possible that you will end up spending more money using wallet.

SWOT

Analysis In today’s world, money transfer is one of the necessary activities for everyone. In this digital
age, it is evident that people are introducing various e-transaction tools and taking a step towards a cashless
society. It becomes extremely important to critically evaluate the feasibility of a cashless society concept in
terms of simplicity, comfort, speed, security and cost. e-transactions should be examined in two different
aspects: ‘Personal’ and ‘Social’. In the personal aspect a cost and benefit analysis of either payee or payer is
carried out, whereas, in the social aspect all parties to a transaction are included. Also, success in creating a
cashless country depends on the literacy rate of its citizens. Therefore, cashless activities are more visible in
developed nations rather than less developed countries.

a) Strengths

A cashless society has many personal, social and economic strong points. In order to identify various
advantages of a cashless society, one of the most important strengths is its ability to reduce crime. Provisions of
cashless transactions discourage people from carrying and using hard cash, subsequently helping in reducing the
crime rate; all transactions being electronically recorded, help to identify and resolve frauds. Peer to peer
transactions enable less dependency on intermediaries and hence improve social interface. More transparent
business activities not only develop positive relationships but also increase healthy competition.. The issue of
fake currency is also a major challenge. A cashless society also has an advantage in preventing illegal activities.
Governments can have better control and will be able to track most business deals, which will, in turn, help in
identifying tax defaulters.

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b) Weaknesses

It is known that in some of the advanced countries cashless transactions have reached up to 50 percent,
even though globally, 85 percent of transactions are still based on cash payments, due to lack of awareness,
availability and accessibility of cashless environments . Although most people believe that e-transaction is an
easy mode of payment. they still do not trust its degree of security. Hacking, Stolen PIN and duplication of
cards are matters of grave concern in terms of safety and security issues. The management of cashless
transactions is another important issue for any individual. Sometimes people are unaware of the remaining
balance and consequently they are unable to use these facilities. The cost of a cashless transaction is higher
than using cash, due to the prerequisite of advanced technology. As far as convenience is concerned, there is no
doubt that e-payments are faster, but these are not within the reach of everybody. Normally, people are
interested but due to lack of knowledge and inability to perform these transactions, the concept of cashless
society is not progressing. recent developments show that an ATM (Automated Teller Machine) is the most
preferred cashless instrument, whereas other instruments are not able to attract enough users because of
unavailability of proper internet connections and level of security.

c)|Opportunities

Availability of low cost electronic gadgets (mobile, computer, laptop), easy accessibility of internet and
proliferation of state-of-the-art technology, are the key indicators of an optimistic future for a cashless society.
Altogether, these developments offer unlimited opportunities in terms of costs, security, and convenience. Also,
education can bring about a substantial change in the way people think about cashless societies. Developing a
cashless society will not only help in the growth of an individual but also help in making society progressive.

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Individuals can pay money and make purchases anytime and anywhere. suggests that in the presence of a
cashless society, people can enjoy both social and personal benefits. Certain crimes will be completely
eradicated if a cashless society emerges successfully. ‘cashless’ could be proven to enhance economic growth.
Also, countries are moving towards being cashless in order to change their status from less developed to
developed countries. Another vital benefit of no longer using cash is in the field of Financial Inclusion (FI).
With the help of FI, financial services can be made available to low-income groups, where these services are
currently either unavailable or too costly.

d) Threats

Although the cashless society has paved the way for a revolutionary concept the future is not isolated from
challenges and risks. The focal concern with cashless societies is the degree of awareness. The majority of the
population is still unaware of the benefits of cashless transactions. Other critical issues are availability,
accessibility, ease of use, safety and speed. Akinola (2012) recommends that all stakeholders of the society
(governments, organizations, financial institutions, and citizens) should come together and resolve
technological, behavioral, legal and security issues. Dagdemir & Sauer (2015) conclude that although the
Chapter - 5.indd 67 2/26/17 11:54 AM 68 Vishal Jain, Parul Jain use of cashless instruments is increasing it
does not mean that cash can be ignored. For low value transactions, cash will remain the primary payment
instrument. Subsequently, for low income group the idea of a life without cash is still a dream.

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