Ever since its inception, the concept of currency has undergone several evolutions over the ages. From barters to coins to paper currency to credit/debit cards to present day digital payments solutions, every evolution has indubitably made a far-reaching impact on the process of transactions and commerce and has made it more convenient than before.
A cursory look at the change presents a curious question- where lies the future of the currency?With several innovative payments solutions such as bitcoins and mobile wallets currently in vogue, one cannot help but wonder what these technological advances will mean for the future of currency. Would we see an end to the paper currency, thereby ending the perpetual drama of tendering the exact change when paying for a service?
As someone who has long been associated with the financial sector, my answer would be yes. With the evolution of digital wallets, that transformation has started and talking specifically about India, the urban population has already embraced the ubiquitous accessibility and convenience of cashless payments in its everyday transactional behaviour. Everything — from transportation to dining to ordering groceries — can now be done through one-click payments. On the other hand, efforts are being made to extend the benefits of a digital economy to the rural population, a large segment of which is still unbanked. Government’s push towards Aadhaar enrollment is one step towards bringing entire population of India on a single digital platform, thesubsequent program of Jan DhanYojna is to connect maximum possible population to banking system and the most recent initiative of Unified Payment Interface (UPI) is to enable all bank account holders to make payments digitally. UPI’s simplistic connect with money transfers instantly using alias at any time using a smartphone in a seamless interoperable payment environment makes it unique.Thoughmajority of retail transactions is estimated at 78% in cash, these changes indicate towards a more inclusive society in future.
As digital money gains acceptance Bank branches will play a lesser role in delivering banking. The pace at which digital innovations are taking place, the rural economy will move to adopt the seamless connectivity of digital payments solutions and forego its dependency on cash-based transactions.
Apart from the technology accessibility and adaptability, another factor for the rural population to adopt the banking relatively slow is the psychological barrier. There is lack of trust for the prevailing banking system however the spur of entrepreneurship has presented options in the form of non-banking digital wallet players. These players are bridging the trust deficit by imparting requisite skillset in the local youth and equipping them to do digital transactions in their respective areas.
All this might make you wonder if these innovations represent the epitome of evolution for the payments technology. Darwin would have said no, and so do I. There are still so many avenues that are yet to be explored in the field of payments to make them more integrated into everyday life. I personally envision a situation where there will be a direct and seamless integration between human beings and payments. Your bank accounts, reward points, bitcoins, mobile wallets will all be linked to your biometric signature. All you need to do to process a transaction is pressing your finger against a scanner on your phone or vendor’s POS. Makes it so convenient!!
Telephone took 110 years to reach 1 billion users, TV took 49 years, Mobile phone took 22 years, Internet took 14 years, and Smartphone took 8 years to reach the 1 billion user mark. With every new technology reaching 1 billion users takes half as long as the previous one, so we might not even have to wait till 2030 to feel the power of digital transactions/solutions.