CASH V/S DIGITAL PAYMENT TRANSACTION IN INDIA

Abstract

Payments are an inevitable part of our daily transactions, be it a consumer to a business or a business to a business. Payments raise a country's GDP; thus, it is mandatory that the payment systems should be "safe, secure, sound, efficient, accessible and authorized. India’s digital payment volume has climbed at an average annual rate of about 50 percent over the past five years. India has multiple payment systems that spur the growth of payments. Even if India's digital payments environment has grown, there is still a need for currency, which the pandemic has made more apparent. It may seem odd that there is a rise in digital payments while the amount of cash in circulation is increasing, which calls for a study of the several reasons people maintain cash. This study, which employs descriptive analysis and empirical insights, concludes that, although the usage of cash as a payment medium is still declining, the precautionary and store-of-value reasons are responsible for the sustained growth in currency demand. This demonstrates how digital payments are increasingly replacing cash in transactional settings. Even while income is still the primary factor influencing currency demand in India, the positive income effect may be mitigated by the digital payments industry's explosive expansion and statistically significant inverse relationship with cash.