Article Image 27100

Why is India so keen on plastic currency?

The worldwide payment landscape is typically split along three lines: cash, plastic and tech. India's Finance Minister, Arun Jaitley, has recently declared it's time for his country to make the move from the first to the second of those two, but is plastic really the best path? We're not so sure. 

The money divide

A MasterCard report on this topic shows a pretty big divide between the developed and developing worlds when it comes to adopting non-cash payments. At just 2%, India has one of the lowest levels of non-cash transactions in the world. Compare this to top adopter Singapore, where 61% of transactions are non-cash, and you see how wide the gap is that Jaitley's trying to close.

The comparison between India and Brazil, both members of BRICS, is more informative still. While India sits in the bottom 10 adopters of non-cash payment (at equal third), Brazil's among the top 15 cashless societies. In short, India is visibly lagging behind, and has a lot of work to do to catch up.

The impact of change

Using cash can cost countries as much as 1.5% of GDP, meaning scrapping it in favour of more modern payment options could save serious money. If India got rid of cash altogether, it could recoup an impressive US$28bn.

Then there’s the effect on India’s infamous ‘parallel economy’, the stores of gold and cash stockpiled outside the country's banks. If those participating in that economy can be convinced to join mainstream financial systems, the nation’s finances would get a major boost, both in terms of value and stability. 

Introducing plastic also improves the availability of electronic transfers. This makes international money transfer faster and cheaper, encouraging overseas trade between SMEs, and bolstering India's economy. 

Alternative paths

However, plastic isn't the only route to those changes. It seems that the Indian government has overlooked the extent to which unbanked populations are skipping plastic, and moving straight to tech payment methods.

In most emerging nations, mobile devices are used more often than PCs. While India is clearly a few steps ahead of them, it could learn some of those lessons. Peer-to-peer payment services like M-Pesa, which is already used in India, have made significant inroads right across Africa. Hailed as powering innovation economies, tech-led payment infrastructures are where the future is headed. And it's where India should aim to be.

Comparison tool

Sending Currency
Buying Currency
Send USD Receive

Latest Articles

Alex Larsen

I've been struggling to find a way to make regular transfers to my Norwegian account from the UK (where I work). Finally I've at least got some pointers for where to start, so I won't have to pay a fortune every time I transfer!

Chloe Rogers

Your site is top, thank you. I was going to use my bank and but came across you on Forbes site, I am glad I did. I went on and used Torfx very good service got the rate right, saved me money compared to many others you list, they even helped me get an aussie bank account. Once again thank you for help!
Paying for overseas holidays

PAYING FOR YOUR OVERSEAS HOLIDAYS IN LOCAL CURRENCY

When paying for your dream holiday in the local currency of your destination country, you want to make the most of superior exchange rates and low fees offered by the foreign exchange brokers listed on our site. This will ensure that you save money and your funds are protected.

uae

International Money Transfers for Individuals

If you are purchasing overseas property, paying tuition fees, receiving your pensions or for whatever reason, transferring money internationally can be a costly. We compare the services on offer for the amount you wish to send and save you money by finding the best exchange rates and lowest fees.

Market Insights

Sign up for our newsletter.

Thank You for subscribing to our Newsletter

You have successfully signed up to our Newsletter