Impact of Demonetization on Cashless Payment System

Abstract

Demonetization is process of stripping a currency as legal tender of money. Government announces demonetization when there is a requirement in the change of currency. It introduced thrice in India. Latest announcement was made by PM Narender Modi on 8^th November 2016. The objective behind the move was black money, counterfeit currency, corruption, and cashless economy. Cashless payment system has its own advantages like it increases the transparency of the transaction, easy to use and available 24x7 for doing transaction. Government also encourages the general people to use cashless method of payment for doing transaction. Several new digital wallets had been introduced after demonetization; it has been observed that there was a considerable increase in cashless payment system post demonetization. Objectives of the research was to  study the benefits and drawbacks of cashless payment system and to analyze the present status of the electronic payment system during post demonetization period. Secondary data has been used in the study to analyze the objectives of the research for this purpose data has been taken from website of NPCI, journals and books. After analyzing the objectives it has been found that the values of electronic payment systems like NEFT, RTGS , IMPS,CTS,NACH, UPI, USSD, POS, PPI, MOBILE BANKING was increased year by year during post demonetization period. Before demonetization the usage of the electronic payment system like UPI, Mobile banking, IMPS, POS is quite low due to security issues and lack of knowledge  about the same, after demonetization in the absence of cash customers  have no option left but to use the electronic modes for doing the transaction. That’s the beginning of the adoption of electronic modes for doing transactions but still people have some security issues, government should take some measures to remove such issues. If government initiate the  proper measures, People in future will fully adopt the electronic payment system.