In 1969, IBM engineer Forrest Barry had the revolutionary idea to stick a magnetic stripe to the back of a plastic card. With this invention, the credit card was born and changed the nature of monetary transactions forever. Today, another cash revolution is taking place, one that could render credit cards obsolete in the near future. Digital cash is an intangible form of currency that requires you to download an app and link it to your bank account. Whenever you take your phone out to pay for a cab or pay your bills with an e-wallet, you’re taking part in this digital cash movement. Demonetisation and the cash crunch that ensued put Indian consumers on a fast track to using digital payment methods. But does digital cash really have a clear edge over credit cards?

The Ease of Operations

Digital cash simplifies procedures for both the payer and the vendor. To apply for a new credit card, you need to fill out a form, send it to the bank and then wait for them to dispatch the card to you. This could take anywhere between a few days to a few weeks. With digital cash, all you need to do is download an app and connect it to your bank account. The entire process from start to finish takes only a few minutes at the most.

For vendors as well, digital payments can open up doors to more consumers and greater profits. Vendors with smaller means and those in remote locations might not have the infrastructure required to install a credit card payment facility. This means that they end up losing valuable customers who don’t want to pay by cash. Digital cash only requires internet connectivity in order to be set up. Many small vendors are moving towards digital cash in an effort to attract more customers.

The introduction of digital cash can also speed up long queues at the checkout counter. According to a Wall Street Journal report, paying by card takes 13 seconds while paying by phone takes only 6. This means that the time every person needs to stand in a queue for will be halved. Instead of reaching into your wallet, fumbling around for your card and handing it over to the cashier to swipe, you can just scan a code, enter the amount and press pay.

The Convenience Factor



A survey by Visa discovered that people are twice as likely to carry their phone with them than carry cash. People between the ages of 18 and 34 are four times more likely. In India, the 2011 Census revealed that more households have mobile phones than toilets. 6 years later, those numbers have only been increasing. Today, because of the drop in Average Selling Price (ASP), more Indians are choosing to buy smartphones. Internet usage has also been rapidly expanding, especially through mobile platforms. According to one IAMI report, India had 371 million mobile internet users in June 2016. Both these factors create an ideal setting for digital cash to become popular in India. More Indians are beginning to resort to using digital cash rather than traditional plastic money. After demonetisation pulled 86% of currency out of the market, India witnessed a 22% increase in digital payments. This shows that digital cash is picking up quickly in India, while credit card user numbers have shown slower growth.

The next area of development in digital currency is within the realm of wearables. Companies are inserting NFC chips into smart watches and rings to make digital payments even more easy. The increasing number of innovations around digital cash point to it being the future in transactions.

The More Secure Option

While convenience is certainly important, when it comes to money, the most important factor is always security. In a nutshell, digital cash does offer more security than credit cards do. When you lose your credit card or if it is stolen, someone can use it to conduct transactions in your name. When you lose a phone, you’re unlikely to face this threat because of two reasons. First, phones are easier to trace with several apps available that can help you track it down. Second, it is much more difficult for someone to break into your phone and use your e-wallets because they are heavily encrypted. Most e-wallets and phones require your fingerprint to unlock. You can also lock your phone with a PIN to make it close to impossible for someone to open your phone and misuse your accounts. There are still a few loopholes in digital payment technologies that need to be worked out, but by and large, digital cash is the safest way to go.


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