India

The payments business in India is on the cusp of a revolution. With rapid growth and modernization of the economy, there is no doubt that a majority of India’s 1.2 billion plus citizens will demand and get modern financial services far superior to what their parents’ generation enjoyed. It is simply a matter of when the supply side catches up.

This report is the product of a research effort that analyzed the most pertinent policy documents, reports, scholarship, expert interviews, and payments data. It is the second in a series of country reports on The Cost of Cash by the Institute for Business in the Global Context (IBGC). The series seeks to ascertain the private costs and risks of cash management facing diverse stakeholders in society: consumers, business, government, and financial systems. It does not forecast the likelihood that cash will fall into disuse, or drop below any threshold in payment market share. It is different from much of the academic work in payment economics, which focuses explicitly on social costs with a view toward informing debates around payment clearing and settlement. Instead, we analyze the private costs to households and businesses that arise from their use of cash, beginning when cash is received and ending when it is spent again. We base our estimates on original IBGC surveys, coauthors’ surveys and interviews, and a broad mix of academic studies and official statistics.

The motivating question is why Indians transact primarily in cash, and whether there is reason to expect any drastic change in their payment behavior in the short to medium term.

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