China and India have similar population. The one difference is that China is more advance in digital payment. Nowadays, it seems India has some movement.
The surprise move, announced on Tuesday evening, is part of a crackdown on corruption and illegal cash holdings. Black money and corruption are the biggest obstacles in eradicating poverty.
People think it is difficult for Indian Prime Minister Moody to promote India’s cashless society. However, after announcing the 500 and 1,000 rupee banknotes will be withdrawn from the financial system overnight. The credit card transactions grew 25% a month after the November 8th banknote policy, and small shops were forced to survive with digital payments to avoid business depression.
Jutendra Gupta, managing director of PayU India, mentioned that the 15,000 POS(Point-Sales-System) machines in a small city have increased four times in the transaction amount. Other mobile payment or online payment also grew fast. Since November 8th, digital payments increased 500,000 users per day.
However, while card payment and digital payment are growing due to scrap money policy, there is still a long way to go for India to become a cashless society. Even when some shops have machines for credit card or digital payment, they still require the customers to pay by cash. Shop owners don’t want the government find their sales increased and need to pay more tax.
Could India catch up in digital payment like China did? It seems that we need to find out more in the future.