From tea stalls to large retailers, scanning a QR code has become the default way to pay in many Indian cities. The question is whether this shift means India is truly becoming cashless, and whether that is entirely good.
Background
UPI (Unified Payments Interface) was launched in 2016 by the National Payments Corporation of India. It lets people send money instantly between bank accounts using a phone, at no cost to the user. Demonetisation in November 2016 and the pandemic in 2020 both pushed millions of people to try digital payments for the first time, and UPI now handles billions of transactions every month.
Points in favour
- Digital payments create a record, which reduces tax evasion and makes the economy more transparent.
- Small shopkeepers and street vendors can accept payments without card machines, and customers do not need exact change.
- Direct benefit transfers reach beneficiaries’ bank accounts, reducing leakage and middlemen.
- Transaction history helps small businesses and individuals build a credit record for loans.
- Less cash means lower costs of printing, transporting and securing currency.
Points against
- Many elderly people and rural citizens still lack smartphones, reliable internet or digital literacy.
- UPI fraud and phishing scams are rising, and victims often do not know how to get their money back.
- Network or server outages can stop payments entirely; cash keeps working.
- Every transaction is recorded, which raises privacy concerns.
- Cash remains essential in emergencies and in much of the informal economy.
A strong way to open
I would like to start by separating two ideas: a “cashless” economy, where cash disappears, and a “less-cash” economy, where digital payments become the default but cash remains. I think the real debate is about the second.
Conclusion
India is becoming “less-cash” rather than cashless. Digital payments clearly bring transparency and convenience, but cash will remain important for years. The goal should be to make digital payments safe and accessible for everyone, with strong fraud protection and digital-literacy programmes, while still accepting cash.