Cash Crunch At Indian ATMs – Can Digital Payments Save The Day?

Cash crunch in India making you frustrated is the current problem with the solution now with digital payments in India. Loan Singh's LaaS platform lets you avail online personal loan with instant approval.

This cash crunch syndrome looks so similar to the cash crunch hassle we faced during Demonetization of 2016, right? But, while that particular cash crunch that hit us at the far end of 2016 was caused by the change in Indian currency, the current one, which appeared across India since the start of this week, is caused due to a sheer shortage of funds.

Cash Crunch 2.0

The shocking reports of Automated Teller Machines (ATMs) running dry across India have left us all wondering, how long before we switch to mobile or digital payments as a means of performing cash related transactions. For those who are slow to embrace digital payments as a solution to the cash crunch, it is a worrisome feeling. Everybody starts to panic. There are talks of insecurity. RBI has announced that there is no shortage, with enough currency in the Reserve Bank of India coffers.

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There is also a theory that with a number of the ATMs being re-calibrated, the delay caused due to re-calibration must have triggered a cash crunch. But, many do not accept this theory because the re-calibration was performed right after the demonetization phase. The current cash crunch, however reminded many of us of the unending queues, frustration with the current government and sarcastic small talk over ‘achche din’ at every get-together.

So, what can be the possible trigger for the ongoing cash crunch in banks and ATMs? One possibility is that of cash supply. There probably must have been some miscalculation that’s occurred in estimating the currency demand in India. The secondary aim of demonetization was to make the masses to understand and adopt digital payments as a mode to perform electronic transactions. Many of us have certainly adopted digital payment solutions, but there are still many who haven’t. We did witness a gradual drop in cheque usage, and a surge in card payment option.

Another possibility could be that many of us know that a Demonetization 2.0 won’t happen so soon, and hence would prefer to stock their personal lockers with money for emergencies or plain savings. This means there is less cash circulating around, and probably a reason for a cash crunch. This simply means that the demand for hard cash is still not being addressed totally, because if 2 out of 5 people are making use of digital payments, then how can the RBI manage this hoarding of cash by the remaining 3?

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The past 6-7 months have seen a boom in weddings/marriages. Then there is also the cropping season. Both activities require an influx of cash. Jewelry is purchased mostly in cash. Weddings, happening at various wedding halls, witness a cash exchange. There is so much being done to avoid IT sleuths from veering closer through your expenses list. The third reason for a cash crunch might be the elections due to happen in Karnataka. Elections entail a huge dosage of spending. The other states will follow eventually. All this can be funneled into a basic theory that the central bank simply did not print enough currency to keep pace with the demands of the country. This again leads us to ask “Did the digitization drive that was spread across India post demonetization work? Doesn’t the furor caused due to a shortage of cash simply mean that majority of Indians still prefer cash?” Maybe there needs to be more awareness being spread for everyone to adopt digital payment methods.

Digital India 2.0

We have seen salaried individuals struggle to get fresh credit from traditional banking solutions. This happens because with no prior credit history to show for, banks do not find such individuals trustworthy or simply creditworthy. Loan Singh is ready to take that risk. Loan Singh is a digital LaaS platform that lets first-time salaried individuals apply for fresh credit even with no credit score. But to mitigate the risks of default, Loan Singh needs the latest 6 months bank statement, PAN card and Aadhaar card of the applicant.

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Digital wallets are also called as ‘Virtual Wallet’, ‘Mobile Wallet’ or as ‘e-Wallet’. Millennials have found digital wallets to be extremely convenient. A digital wallet is likened to a traditional leather wallet. It is a safer and convenient way to safeguard your money and cards. It stores your personal and financial information in a digitized form. It is an electronic platform that allows individuals to make electronic transactions. Digital wallets allow us to perform offline, as well as online, transactions to merchants who are registered with the digital wallet service provider.

Digital Wallet

The working of a digital wallet is different from that of other card payments. A digital wallet makes use of a Near Field Communication (NFC) controller and antennae to enable mobile devices to send out account information to devices at payment counters. A secure smart card chip on the phone stores and allows access to the account information. All this can be executed via the installed digital wallet application on your smartphone. The communication is not restricted to NFC, but can also be done via web links, QR Code, SMS or even social media.

During the payment process, the shopper is authenticated. Then the shopper has access to the full features present on the digital wallet account. Merchants have to strongly consider their customer base while setting-up a digital wallet service because not everyone will be intending to make payments via digital wallets. In the world of digital wallets, there is not much difference between customers or merchants. It is just an accounting ledger convention wherein the payment from a customer to a merchant is just a database update (as all the money is flowing in the wallet itself). The working of a digital wallet is only effective if the API integration, for merchants, is done properly.

  • It requires effective security and permissions to access your information
  • The wallet can be used to purchase products online or offline
  • A password, QR code, an image or some authentication code is used for security
  • The digital wallet is linked to your bank account
  • Digital wallets allow currency conversions
  • Shoppers can also create an unverified digital wallet at the time of payment
  • It can also be used for authentication. For example: to verify the age while purchasing alcohol

Digital Wallet Benefits

  • The biggest advantage for customers is convenience – no need to carry cards or cash
  • Makes purchases easy with a ‘tap-to-pay’ approach
  • Enables automatic redemption of offers
  • Allows for enhanced security during transactions due to encryption
  • Faster processing of payments

Digital Wallets in India

You can get in-depth information regarding digital wallets online, but we have put up a brief listing of digital wallets being used in India. They are not listed in any particular order.

Airtel Money

Using this app allows users to easily recharge their Airtel prepaid account or pay their postpaid bills. This wallet can also be used to shop online if your wallet has cash loaded in it. Airtel Money is extremely safe and each transaction or payment can only be authorized via a secret 4-digit mPin.

Citrus Pay

One of the top digital wallets in India, the Citrus Pay wallet offers its customers’ payments options towards businesses. It is reported to have tied up with more than 10000 merchants with more than 10 million transactions a month.

Freecharge

Ask any young millennial and Freecharge is surely one of the apps installed on their smartphone. Freecharge provides an equivalent amount of coupons for every recharge made. This surely goes a long way in saving the amount spent on bills online. A reported 20 Million users use Freecharge as a mobile payment solution. Freecharge also allows the user to donate money to a registered NGO. Its common e-wallet features include adding money using a credit card, debit card or net banking and instant payments. They also provide discounts to users on transactions.

ICICI Pockets

The ICICI Pockets e-wallet allows its users to connect to their respective bank account for mobile transactions. You can send/receive money, book tickets, recharge online, pay for online shopping and share gifts with friends. It is a fast, convenient and secure e-wallet for mobile transactions. Funds can also be transferred to email ID contacts or WhatsApp contacts.

Oxigen

Oxigen is a Fintech company founded in 2004 and is one of the major providers of digital payment in India. The Oxigen wallet is used for making purchases online and paying bills. Oxigen is considered to be a safe and secure digital wallet which asks a user to input a 6 digit OTP that is sent to the registered mobile number. It covers almost all major banks in India. It provides both online and offline modes. The offline mode allows payment to be made at physical stores such as CCD, Croma, BigBazaar, etc. Oxigen has also tied up with Goibibo, Indiatimes, KFC, eBay, Jabong, Justdial, etc.

Citi MasterPass

Another free digital wallet on the list, Citi MasterPass helps you move through an online shopping checkout process quicker.

Mobikwik

Mobikwik e-wallet payments system helps users to store money. They are used to recharge your phone, getting discounts on deals, pay bills, load money using a credit card, debit card, and net-banking; door-to-door cash collection and making third-party purchases.

Mobikwik has tied-up with close to 2,00,000 merchants and has around 40 Million customers.

HDFC PayZapp

HDFC PayZapp allows digital payments via one click. You can also compare hotel bookings and flight ticket pricings. You can even buy music and pay your bills via the PayZapp. All you need to do is connect your debit/credit card to the app.

Paytm

Launched in 2010, Paytm is currently the largest mobile wallet app in India. It allows payment of mobile bills, buying movie tickets, shopping online; transferring money directly to your bank or someone else’s bank account and paying for your Uber journey (with cash back).

Paytm is adopted by SME vendors, rickshaw drivers, and shopkeepers. Such is its reach. Paytm has also tied-up with brands such as LG, Nike, Onida, Sony, Lenovo, Panasonic, and more.

Vodafone MPesa

MPesa allows a secure, fast and convenient medium for making mobile transactions. It is a subsidiary of Vodafone M-Pesa Limited jointly operated with ICICI Bank. The wallet allows redemption or cash withdrawal for its users.

JioMoney

Sweeping the nation since 2016, Jio’s digital payment app – JioMoney, offers easy, fast and secure transactions. The app offers great discount and offers to its users. With more than 160 million reported subscribers, Jio provides the largest internet service in India. JioMoney can be used to make recharges online, book tickets online, transfer and receive money; and also pay for your cabs. It also offers massive discounts and deals on making the first transaction.

Chillr

Chillr has tied up with close to 52 banks across India. It easily allows management of multiple accounts from one digital wallet. You can make payments for recharging your mobile, book movie tickets online, receive and send money and also avail discounts on transactions.

State Bank Buddy

A product of State Bank of India, ‘Buddy’ is an online wallet that is available in 13 languages. Non-SBI account holders can also send money via Facebook to other bank accounts. It can also be used to book movie tickets and hotel reservations. The cash to wallet can be loaded using a credit card, debit card or net banking. You can also set reminders for due payments.

PayUMoney

A product of PayU India, PayUMoney is a payment gateway that allows merchants to collect payments from customers. The mode of payment can be credit cards, debit cards or via net banking. They also offer email invoicing and SMS notifications. It is a safe and secure platform and used across India by e-commerce websites.

PayUMoney is also introduced as a mobile wallet service. The wallet allows its users to perform online transactions. It also offers reward points for every transaction. It also provides a PayUMoney Buyer Protection which ensures the product reaches your designated address.

Juspay

Juspay Safe is a payment browser that allows users to make online payments fast with just 2 clicks.

LIME

Launched by Axis Bank in 2015, LIME was one of the first smartphone apps in India that integrated shopping, payments, integrated wallet, and banking. It also allows users to invest in a deposit and share your wallet.

Ola Money

Launched in 2015, Ola Money is a digital wallet offered by Ola. They are not just used towards making payments for Ola cab rides; you can also use them for purchasing groceries and booking flight tickets.

PayPOS

Launched in 2012, PayPOS is an app that allows small business owners to receive payments easily via debit cards or credit cards. They are also capable of processing electronic transactions.

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Loan Singh’s Online Presence

Loan Singh is not an anonymous digital platform. We are present on almost all leading social media platforms. All you need to do is look for us. Some destinations you can find us on are:

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Cash crunch in India making you frustrated is the current problem with the solution now with digital payments in India. Loan Singh's LaaS platform lets you avail online personal loan with instant approval.

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