The pandemic has forced upon us many habits. One such habit is digital payments. People who have never paid a bill online are paying online. The COVID-19 epidemic has dramatically boosted the use of digital payments. The outbreak has accomplished what measures like demonetization and GST have failed to do. In the current scenario, digital payments play a vital role and provide numerous advantages over cash, such as payment convenience, confidentiality, and openness. However, in order to aid recovery and contribute to the emergence of this new standard, it is critical that the digital payments ecosystem improves promptly and assists in making digital payments a new normal for customers.[1]

The purpose of this article is to explain the concept of a cashless economy, the need for one in India, the challenges it faces, and how the covid outbreak has boosted online payments, the regulations put in place by banks and legislators to facilitate this abrupt change, and what could be the possible changes in payment methods in post covid era.

Introduction
The catastrophic COVID-19 epidemic fuelled a positive growth toward cashless payments in India. The usage of digital payments for everything from groceries to electricity bills to cab fares is on the rise. According to research by fintech start-up Razor pay, digital payment transactions increased by 76% in Jan-Feb-March (JFM) 2021 over JFM 2020. In this timeframe, India's digital payments ecosystem has witnessed the type of growth that might have occurred over a 3–5-year span if not for the outbreak. [2]

A cashless economy is one in which the flow of cash within an economy is non-existent and all transactions must be conducted via electronic channels such as direct debit, credit cards, debit cards, electronic clearing, and payment systems such as Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), and Real-Time Gross Settlement (RTGS).[3] India strives to become a cashless economy since the circulation of currency notes in an economy allows for unauthorized transactions, resulting in the formation of unaccounted money or black money among individuals. Transparency, efficiency, and the movement of money through financial channels, as well as the imposition of checks on black money in the hands of individuals, demand the use of cashless transactions in an economy.[4]

The fear that hard currency may transmit the coronavirus indicated a strong preference for cashless payments, as well as an urgent need to change regulations and protocols to protect the efficiency and stability of financial institutions while accommodating the shift in consumer demand. [5]

Concept Of Cashless Economy:

A cashless economy is an economic condition in which financial transactions are done through the transmission of digital information (typically an electronic representation of money) between the transacting parties rather than through the use of real banknotes or coins. The term "cashless economy" does not refer to an economic system in which goods and services are exchanged for goods and services (the barter system), but rather to an economic evolution that discourages the use of currency as a medium of exchange and encourages the use of digital modes of exchange as an alternative. In a cashless economy, the complete elimination of cash transactions in economic contexts is not required; rather, the necessity for cash transactions should be minimized to a bare minimum.[6]

Modes Used For Digital Payments:

Banking Cards:
Bank cards provide greater security, convenience, and control to consumers than any other payment option. The availability of a wide range of cards, including credit, debit, and prepaid cards, provides further flexibility. These cards provide two-factor authentication, such as a secure PIN and an OTP. Card payment systems include RuPay, Visa, and MasterCard, to name a few.

Unified Payments Interface (UPI):
It's a system that connects several bank accounts to a single mobile app (from any participating bank), bringing together a variety of financial services, easy fund routing, and merchant payments under one roof. It also handles Peer to Peer collect requests, which may be scheduled and paid according to need and convenience.

Mobile Wallets:
A mobile wallet is a device that allows you to carry cash in digital form. You may link your mobile device's credit card or debit card details to the mobile wallet application, or you can transfer money to the mobile wallet online. You can use your smartphone, tablet, or smartwatch to make purchases instead of your traditional plastic card. Most banks and some private firms have their e-wallets. Ex: Paytm, Mobikwik

Mobile Banking:
It's a service provided by a bank or other financial institution that allows customers to do different financial transactions using a device such as a phone or a tablet. It employs software, sometimes referred to as an app, offered by banks or financial institutions for this purpose.[7]

Need For Cashless Economy In India

• Increased Tax Collection:
  Unlike physical money, card payments or digital payments are easy to trace, making it easier for government agencies to keep track of people's spending and bring more individuals into the tax fold who were previously not paying taxes while having big earnings.[8] Because there is less physical cash available at houses and more in banks, there is less opportunity to conceal income and evade taxation. When there are more taxpayers, the overall taxation rate for the country is reduced.
   
• Prompt settlement of transactions:
  E-banking simplifies transaction settlement both locally and worldwide, with the bank acting as a paying bank to clients for transaction settlement or as a collecting bank for payment on transactions.[9]
   
• Transparency and accountability:
  When cash trading is eliminated, the system's transparency becomes obvious. With every transaction documented and tracked, the risk of losing money or engaging in other illegal actions is reduced.[10]
   
• Foreign Investors:
  It would minimize fraud in cash transactions and encourage international investors to invest in the country since this form of payment is secure.[11]
   
• Helps to control black money:
  Digital transactions will let the government keep track of things and, in the long term, will assist to stop the circulation of black money and counterfeit notes. Aside from that, the cost of minting currency may be reduced, which may benefit the economy.[12]
   
• Lower physical theft rates:
  Cash thefts would potentially cease if there was no tangible money in anyone's pockets to steal. Muggings, store, and residential break-ins, and handbag theft are just a handful of the crimes that will most likely disappear.[13]

Challenges Of Cashless Policy In India:

• Blocked Internet:
  When there is a substantial law and order issue, like in Jammu and Kashmir after the repeal of Article 370, the government frequently bans internet access in such areas. One can only imagine what would happen if a town switches to a digital platform for transactions, only to be cut off from the internet the next day because the local government decides to turn off the internet connection due to a law-and-order problem. As a result, the government must endeavor to eliminate these stumbling blocks.[14]
   
• Weak Data security laws:
  Hacking and cyber theft are significant and complex issues that might arise as a result of online transactions. Even tech-savvy individuals are cautious about cashless transactions due to India's lax cyber laws against online theft. Cyber security measures must be put in place to prevent money from slipping into the hands of the wrong people.[15]
   
• Digital Literacy:
  More than half of the population is still unable to operate a computer. Smartphones are still mostly unknown in rural regions. Furthermore, internet access is scarce, and a country cannot go cashless without it. There are still a lot of rural and urban locations, where getting a 2G network is quite tough. Furthermore, as compared to developed countries, the cost of an Internet connection is quite expensive.
   
• Language Barrier:
  The internet is an English-based platform. The information on the plastic card is likewise written in English. The transaction notice received on smartphones is likewise in English. As a result, various languages must be used in these procedures, or everyone must be able to learn English.[16]

Digital Payments Are Booming In The Covid-19 Era

• Peer to Peer payments:
  People were stuck at home for weeks after unexpected lockdowns were enforced in most nations. Person-to-person payment applications came to the rescue when it came to sending money to bereaved relatives and friends, as well as paying rent to landlords. All of these purchases may be completed with a smartphone instead of using cash. Payments may be made online, which is remote, in a cashless world, and proximity payments can be made for unattended or attended retail establishments. The proximity technique may be used to make contactless mobile payments with credit and debit cards saved in an e-wallet.
   
• Increased use of FASTag:
  For commuters, cashless tolls are a blessing since they allow them to continue driving without having to stop at toll booths. During the outbreak, this was especially successful and useful since it reduced the need for commuters to stop and engage with toll workers, contributing to everyone's safety. Cashless toll payment is supported by transportation organizations all around the world since it is secure, contactless, and saves time. The number of cashless toll permits issued by India's national roads has significantly grown in these covid times.
   
• Contactless Transactions at Grocery and Retail Stores:
  With the arrival of Covid 19, the food retail industry rushed to adopt optimal cleaning and sanitizing techniques. Customers were given cashless payment alternatives such as wave payment and tap and go cards at grocery stores.[17]
   
• Fear of spread of infection:
  Since the outbreak of the coronavirus, many people have begun to shun cash transactions in favor of contactless card payments, which do not need a physical connection with a person or a machine and are simple to use.
   
• Digital payments for donations and NGOs:
  Digital payment gateways play an important role in assisting NGOs in receiving donations from all around the world. The Prime Minister of India launched the PM Cares Fund, which received millions of rupees through digital gateways in a relatively short time.
   
• Digital Fee/Salary payments:
  Fees are increasingly being accepted online by schools, universities, and online educational organizations. Many businesses and organizations have also adopted online wage payments for their personnel.
   
• Digital payments under Pradhan Mantri Garib Kalyan Yojana:
  Under the Pradhan Mantri Garib Kalyan Yojana, digital payment channels were utilized to distribute approximately Rs.280 billion to over 300 million impoverished people.

Measures Undertaken To Accommodate The Shift Towards Digital Payments:

In the aftermath of the COVID-19 outbreak, various payment-related procedures have been implemented:
Banks
There are fears that the infection may spread through the exchange of actual money. Banks have temporarily eliminated fund transfer costs on major digital systems like NEFT, RTGS, and IMPS to discourage cash exchange and boost digital payments.

Furthermore, to guarantee quick access, several banks have eliminated fees on cash withdrawals from third-party ATMs using debit cards.

Reserve Bank of India (RBI)

• The Reserve Bank of India has imposed a three-month suspension on loan and credit card payments.

National Payments Corporation of India (NCPI)
NPCI has accelerated the UPI or UPI-QR onboarding process to make it completely frictionless and online. This is anticipated to assist small businesses (that provide vital services) in establishing an internet presence in a short period.[18]

Government Policies:

• Digital Finance for Rural India:
  Creating Awareness and Access through Common Service Centres (CSCs): It aimed to turn CSCs into Digital Financial Hubs by boosting public awareness of government policies and rural people's digital finance options. The government put in a generous expenditure of 65.625 crores to popularise various digital financial services like IMPS, UPI, Bank PoS machines, and so on to propel the project forward at the required speed.
   
• Prime Minister's Digital India program:
  The program, which began on July 1, 2015, provided new measures to guarantee that residents, even rural Indians, could digitally access all government services via high-speed internet.
   
• Bharat Net Project:
  It is the Government of India's main project to promote internet services, e-banking, e-governance, and e-education among the rural people. To achieve this, the proposal promised a 100 Mbps connection to each of India's 2,50,000 Gram Panchayats. [19]

Post-Covid Future Of Digital Payments

Continued digital payments push: Governments, regulators, and banks will all continue to press for the use of electronic payments. As digital methods become more widespread and accepted, they will change from a convenience to a necessity, there will be a significant shift away from cash.

Consumer behavior:
People's worry over immediate survival, whether it's food or medication, is counteracting long-held apprehensions about digital transactions, which may have slowed acceptance up until this point. There will be a substantial shift in consumer behavior, with many first-time users continuing to use digital payments even after the present crisis passes.

Contactless payments:
Contactless payments in actual time will become increasingly common. They will help move the needle on digital payments away from the present low volume, high-value tilt and toward high-volume, low-value transactions, eventually leading to a reduction in cash usage. People will want to use contactless payment mechanisms; thus, wearables will gain popularity.

QR/link-based payments:
Because QR codes are both cost-effective and contactless, they are projected to gain in popularity. Offline to online payment options will also become more available. These will gain popularity since they will let many small and individual company owners (such as milk and vegetable sellers) receive payments when consumers are afraid to use cash, ultimately leading to a reduction in cash usage.

DBTs:
As India recovers, DBT rails will see increased use, allowing for immediate infusions of funds to the bottom of the pyramid. As a result, rural spending will increase, assisting in the recovery of the economy.

EMI transactions:
Due to the potential delay caused by the COVID-19 pandemic, a somewhat higher proportion of transactions may be converted to EMIs.
Increased online presence: Companies having a significant internet presence are likely to suffer less as a result of the anticipated slowdown. Small companies and players with little or no internet presence may need to consider partnering with payment experts. Banks and other payment service providers may give such companies discounted rates to get them online.

Process overhaul:
Companies having a significant internet presence are likely to suffer less as a result of the anticipated slowdown. Small companies and players with little or no internet presence may need to consider partnering with payment experts. Banks and other payment service providers may provide lower rates to such businesses to bring them online.

Payment processors:
Because of the projected growth in digital transactions in the future, they will be incentivized to spend on service quality as well as infrastructure and capacity. EdTech, entertainment, telemedicine, pharma, and other businesses that are moving to higher digital use will drive new growth for both retail and corporate payments. An emphasis will be placed on omnichannel payment services. Furthermore, as more businesses provide digital payment systems, the resultant rivalry could assist to improve end consumers' overall service experience.

Customer education:
There will be a greater emphasis on consumer education to decrease touch during purchases, such as requiring customers to enter their cards into POS machines rather than handing them over to the salesperson, or using the contactless function on cards for payments under INR 2,000.

The catalyst for innovation:
FinTech will be at the forefront of the present crisis, which will function as a spur for innovation. In comparison to PoS, there will be more e-commerce-based offerings. All payment players will be forced to build multichannel functionalities quickly, which will connect payments in any physical or digital place.

Combat fraud:
As the number of digital transactions grows, fraudsters will take advantage of the increased online activity to target unwary customers and businesses. All participants in the ecosystem will need to improve risk monitoring, employ business intelligence tools, and scale-up real-time monitoring systems, while also ensuring consumer education efforts are in place.

Payments industry consolidation:
As firms search for ways to stay afloat, the trend of payment processors and acquirers merging will continue. Companies that deal in digital payments are fundamentally cash enterprises that rely on their risk capital. As the number of transactions declines, there may be more deals in this sector.[20]

What Banks Must Do To Maintain A Cashless Economy In Post -Covid Era:

1. Open data access and leverage analytics to design personalized offerings
   Customers and companies will turn to financial institutions for guidance on how to properly manage their money and prepare for future disasters such as the COVID-19 pandemic. Banks must provide personal financial management (PFM) services to customers and assist them in managing their changing financial circumstances. To do so, banks will need to build up PFM solutions by leveraging analytics frameworks to derive critical consumer insights, predict developing demands in the post-COVID-19 period, and create products to satisfy those needs. These efforts must be expedited, and banks must provide data access in areas not covered by the Open Banking and Payment Services Directive 2 as soon as possible (PSD2). As the world recovers from the epidemic, regulators throughout the world must move fast by expanding Open Banking data sharing principles through the Open Finance effort, especially because PFM solutions based on data analytics will likely find increased worldwide adoption as the world recovers.
    
2. Upgrade infrastructure to support growth in digital payments:
   Stakeholders in the payments industry are already working on future-proof, highly robust infrastructures and multi-currency clearing systems. These programs, however, are still far from being completed, and remote working is likely to add to the delay. In the post-pandemic period, however, banks must fully adopt remote working solutions to guarantee that change programs stay on track since infrastructure development projects are vital to effectively support digital client engagement and digital payment volume growth.
    
3. Step up cybersecurity, cyber surveillance, and financial crime controls:
   The unpredictable times brought on by the COVID-19 epidemic provide possibilities for fraudsters to strike at the organization's weakest points. To detect risks across various organizational layers, banks must improve their monitoring methods. Given the importance of being able to make payments quickly and conveniently in the current scenario, banks must review and monitor the efficacy of threat detection and management systems, as well as implement sufficient safeguards.[21]

Conclusion
Digitalization is a need of the modern world. With globalization reaching its pinnacle, it is no longer possible to wait for the real currency to complete every other transaction. There must be a method to expedite these processes. A cashless economy is required immediately. In a world where money does not exist in the form of paper, all that is required is a single click of a button. As the COVID scenario unfolds, its influence on consumer behavior and expectations, as well as corporate expectations, will become increasingly evident.

However, once the pandemic has passed, it is evident that we will return to a new normal. The digital payments ecosystem must adapt rapidly and efficiently to aid recovery, lead the transition to this new normal, and shape the post-covid future. Otherwise, India would be in the same situation as it was before COVID in terms of digital payments. [22]

References:

1. Parvathi S, The Impact Of Pandemic On Digital Payments In India, 55, Journal Of The Maharaja Sayajirao University Of Baroda, 216, 216, (2021)
2. Digital payments grew by 76% in the past 12 months,
   https://www.business-standard.com/article/economy-policy/digital-payments-grew-by-76-in-the-past-12-months-razorpay-report-121041200822_1.html (last visited July 1, 2021)
3. Sunitha Avula, The Cashless Economy in India: Prospects and Challenges, 2, International Journal Of Management Studies (2017)
4. Suman Bansal, Cashless Economy: Opportunities and Challenges in India, 3, World Wide Journal Of Multidisciplinary Research And Development, 10, 10, (2017)
5. Allam, Zaheer. The Forceful Reevaluation of Cash-Based Transactions by COVID-19 and Its Opportunities to Transition to Cashless Systems in Digital Urban Networks. Surveying The Covid-19 Pandemic And Its Implications, 107–117 (2020)
6. Aritra Brahma, Rajasi Dutta, Cashless Transactions and Its Impact - A Wise Move Towards Digital India, 3, International Journal Of Scientific Research In Computer Science, Engineering And Information Technology, 14, 14 (2018)
7. Sudha.G., Sornaganesh.V., Thangajesu Sathish. M, Chellama A.V., Impact of Covid-19 Outbreak in Digital Payments, 6, International Journal For Innovative Research In Multidisciplinary Field, 159, 161 (2020)
8. Anand Choudhary, On way towards a cashless economy Challenges and opportunities, 8, International Journal Of Business Management & Research (IJBMR), 1, 4, (2018)
9. Borhan Omar Ahmad Al-Dalaien, Cashless Economy in India: Challenges Ahead, 1, Asian Journal Of Applied Science And Technology (AJAST), 168, 169-170, (2017)
10. Rise Of Digital Payments and UPI in India, https://www.outlookindia.com/outlookmoney/fintech/rise-of-digital-payments-and-upi-in-india-5685 (last visited July 1,2021)
11. Kartik Aggarwal, Sushant Malik, Dharmesh K. Mishra, Dipen Paul, Moving From Cash To Cashless Economy: Toward Digital India, 8, Journal Of Asian Finance, Economics And Business, 43, 45, (2021)
12. M. Thirupathi, Dr.G. Vinayagamoorthi, Dr. Sp. Mathiraj, Effect of Cashless Payment Methods: A Case Study Perspective Analysis, 8, International Journal Of Scientific & Technology Research, 394, 396, (2019)
13. Coronavirus and a cashless society, https://fintechmagazine.com/digital-payments/coronavirus-and-cashless-society (last visited July 3, 2021)
14. Supra note 8, at 5
15. Rudresha C.E, Cashless Transaction in India: A Study, 4, International Journal Of Scientific Development And Research (IJSDR), 62, 65 (2019)
16. Supra note 9 at, 170
17. 10 ways COVID 19 has pushed us towards a cashless economy, https://www.nelito.com/blog/10-ways-covid-19-has-pushed-us-towards-a-cashless-economy.html (last visited July 3,2021)
18. Impact of the COVID-19 outbreak on digital payments,
    https://www.pwc.in/consulting/financial-services/fintech/dp/impact-of-the-covid-19-outbreak-on-digital-payments.html (last visited July 4, 2021)
19. The shift to digital payments: Empowering rural areas to make transactions seamless, https://timesofindia.indiatimes.com/blogs/voices/the-shift-to-digital-payments-empowering-rural-areas-to-make-transactions-seamless/ (last visited July 4,2021)
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21. Impact of covid-19 on digital payments, https://www.tcs.com/impact-of-covid-19-on-digital-payments (last visited, July 4,2021)
22. Supra note at 18

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