Promoting Cashless Payments in India

36 Pages Posted: 13 Dec 2015

Date Written: December 11, 2015


This paper estimates the amount of cashless transactions that is prevalent in India. It uses survey data conducted in 2014 (from World Bank Findex) as well as household and enterprise survey conducted in 2009-10 to estimate the same. Information captured from the latter survey is also used to identify the bottlenecks and enablers of cashless payments in India. The paper presents a predictive model as well as proposes a theoretical framework to outline policy directions to promote cashless.

Our findings are summarized below:

• Inflow of funds in bank account works as a great enabler for cashless payments.

• Approximately 12% of all urban households have made one or more cashless transactions in the last 12 months.

• Approximately 3% of all (household) urban transaction value is done by using cashless instruments.

• More than half the households who make cashless transactions spend 5% or more through cashless and almost a quarter of the cashless households spend more than 10% through cashless.

• Approximately 80% of the households make cashless transactions in only one item.

• If the households have an incentive to keep records of financial transactions, they will have higher chances of incurring non-cash expenditures.

• Supply side constraint (that is unwillingness by the seller to accept such payments) is the biggest deterrence to cashless payments.

• In order to incentivize the cashless payments, the joining fee for the consumers have to be lowered.

Thereafter, we develop a predictive model of cashless payments. The results put together gives us an important policy direction towards what can enable increase in cashless payments.

Keywords: Cashless transactions, household survey, network effect, predictive modeling

JEL Classification: G18, G29, O53

Suggested Citation

Mukhopadhyay, Bappaditya, Promoting Cashless Payments in India (December 11, 2015). Available at SSRN: or

Bappaditya Mukhopadhyay (Contact Author)

Great Lakes Institute of Management ( email )

815, Udyog Vihar
Phase V
Gurgaon, 122001

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