The impact of efforts to demonetize Asia’s second largest economy, and why cash has such a strong hold in India were analyzed in a recent PYMNTS.com Global Cash Index™, a Cardtronics collaboration. Below is an excerpt from the original
article that appeared in PYMNTS.com on August 7, 2018.
Demonetization was launched in India in an effort to crack down on the nation’s underground economy, boost tax revenues and encourage the transition to a digital banking infrastructure. However, nearly two years after the policy launched in 2016, cash remains a key component of the nation’s economy.
Several factors are helping cash thrive in India, including its large rural population with limited internet access, distrust of the nation’s financial systems and the population’s cultural ties to cold-hard cash. Meanwhile, a thriving underground economy is also keeping use of cash active. Based on current trends, the rate of total cash usage in India is expected to rise at a compound annual growth rate (CAGR) of 10.47 percent from 2016 to 2021.
Here are some notable findings from the latest index:
- India has just six point-of-sale (POS) terminals per 100,000 people, far below the rate of other Asia-Pacific neighbors.
- India spent $1.5 trillion in cash in 2016, far more than any other nation in the region.
- India has four bank branches per 100,000 people, a rate lower than Australia and South Korea, but more than Singapore.
As the PYMNTS Global Cash Index clearly shows, cash is a highly-valued and critical form of payment within the growing mix of payments options available in India. In the country's fast-growing economy, all payment methods stand to benefit, with cash expenditures expected to climb significantly in real dollar terms. To read the feature story and get the latest insights on cash usage in India, download the Index.