Monday May 8 marks six months since demonetisation, and many Mumbaikars are back to using cash in their daily transactions. Rs 500 notes have re-entered circulation so the problem of getting change for Rs 2,000 has ebbed.
“India has and will always be a cash economy. Even the upper class cannot always use credit cards or make cashless payments,” said Shivaji Pawar, who owns a cellphone repair shop near Andheri market and only accepts cash.
The government’s attempt to encourage more cashless transactions faces two obstacles: security concerns related to fraud and theft, and the fact that card users pay a premium on e-transactions. “Every other day we read of phishing frauds in the newspapers. Why take needless risk by giving personal details to unknown salespersons when you can safely hand out cash? And why pay more at all?” says Sarita Sadarangani, a 65-year-old resident of Khar. Senior citizens are particularly reluctant to use online technology for shopping.
Traders point to other drawbacks. “We did try to shift to online payments, but the costs are overwhelming. First you pay to install a point of sale machine, which in any case banks were unable to supply for weeks, then you pay service tax and other charges. Moreover, now banks have levied transaction charges, which is another headache for buyers and sellers. Cash is best,” said a toy merchant in Crawford Market.
“Most of our customers have reverted to using cash,” said Jinit Shah, manager of Sony Mony electronic store in Andheri west. However, Hitesh Gala of Top 10 mobile store in Lokhandwala said many first-timers are going cashless to avoid the risk of carrying large amounts on their person.
November 2016, when demonetisation was announced was the middle of the wedding season, and now six months later, April-May brings another round of marriages. “Old habits are visible again. I would say 50% of sales take place in cash,” said Palak Shah who owns a trousseau store in Irla.
That said, digital payment providers, which made deep inroads in the aftermath of demonetization, are expected to retain a chunk of their business. Usage in ticketing and utility bill payment, for instance, remains high due to sheer force of habit among users. Banks have installed over 10 lakh card swipe machines after Demon. The most noticable difference has been in petrol pumps where instead of facing a surcharge customers get a 0.75% discount.