Exploring India’s Cash Preference

India enjoys a wide range of payment options today, however cash remains king. Business news website Inventiva examined its persistent popularity, concluding people’s reasons for choosing cash vary from practical considerations to sheer personal preference.

Inventiva observes that consumers were expected to move from cash to cashless options in the wake of 2016’s demonetisation, which stripped 500 and 1,000 lakh banknotes of their value overnight. While some have adopted cashless payments, Inventiva cites a survey by the Reserve Bank of India that found more than half of people still prefer paying in cash.

The motivations behind this preference are diverse. Inventiva notes that, for many, money in hand feels more real and is more satisfying for making and receiving payments. There is also the added requirement of accounts and internet access when making cashless payments, which can make transactions less convenient or accessible for some. The immediacy and certainty of a cash transaction is important for many—especially those operating smaller, local businesses—and their privacy is an added bonus in a world of increasingly intrusive tracking of personal data.

Mobile wallets have gained popularity in recent years, with an estimated 140–150 million users among India’s population of 1.38 billion. Inventiva suggests improvements are needed to the nation’s infrastructure to support ongoing growth, but notes there are other reasons people may continue to prefer cash, such as charges levied by cashless payment providers.

As India’s internet infrastructure is strengthened and widened, cashless options will become more available in remote locations, however new problems are arising that may offset these gains, such as cybercrime, which Inventiva says ‘could seriously hamper the market’s growth’. Overall, for the foreseeable future, it seems cash will continue to play an irreplaceable role in India’s economy.