2019 did not disappoint, becoming a defining year for fintech and digital payments in India.

Accelerating the momentum it had gained from the hugely controversial demonetization policy of the government back in 2016, digital payments services like UPI (United Payments Interface) and others are taking the country by storm.

It found thousands of new takers across the country, luring them in with the promise of convenience and cashback. The surge in popularity of online payments, alongside the usual card-based transactions, came as excellent news for the proponents of the Digital India campaign, as they gleefully celebrated our bid to go cashless.

As we usher in a brand new decade, those at the helm of the campaign and the National Payments Corporation of India (NPCI), are determined to steer us towards a cashless future as quickly as they can. In fact, today we are seeing more and more people fishing their phones out to pay at restaurants and theatres, or to simply settle dues with their friends. From all that we see around us, it is rather evident that a substantial chunk of Indians are now stepping out of their homes without stuffing their wallets with wads of cash; relying on a plethora of payment apps on their phones instead.

However, despite the resounding success digital payments have seen so far, is India really ready to leave cash transactions behind?

Even though the Indian government did try quite hard to upsell the concept of digital payments in the wake of its heavily criticized demonetization policy, data from the Reserve Bank of India tells us that we are still a long way off from those efforts bearing fruits.

In its Annual Report 2018–2019, the apex bank of the country noted that the value of the currency in circulation had increased by as much as 17 percent in March, reaching a total figure of 21.10 lakh crores. The report also points out that people were most likely to opt for 500-rupees notes, which is the second highest denomination currently available in India.

In terms of volume, the year saw a 6.2% rise in circulation.

As is evident from these figures, cash is still king in the Indian context. However, that does not necessarily mean that digital payments aren’t seeing success as well. In fact, the report also notes that e-payments in retail jumped by a whopping 59% over the same period, taking the total value of all such transactions to 23.3 billion. Moreover, in the period between October 2018 and September 2019, digital payments constituted 96% of all non-cash payments made for retail purchases in India.

Even though cashless payments have received a major boost from the government’s support and an expanding technology stack, they are far from becoming the chief mode of payment for a majority of ordinary Indians.

Despite smartphone adoption rising steadily, even in remote areas of rural India, massive chunks of the population still shy away from relying on something that is so inherently intangible in nature.

However, the obstacles to going cashless are far graver than simply the unwillingness of potential users. For starters, India has a very large proportion of unbanked people, and even those that have been brought under the purview of the Pradhan Mantri Jan Dhan Yojana often leave their accounts dormant. For making digital or electronic payments, having a bank account is a prerequisite.

In fact, for some of the online payment services, it is also compulsory to complete a KYC verification process. Considering how so many Indians are yet to have even a bank account, let alone the enthusiasm to complete time-consuming verifications, it is obvious that the country is not yet poised to go cashless nationwide.

Moreover, even though smartphones are selling like hotcakes all over the country, technology adoption has not advanced far enough to let every demographic embrace the concept of safe and secure digital payments. While more and more people may be signing up on social media sites and watching YouTube videos on their phones, not even half of them are comfortable enough to complete online transactions without falling prey to scams and frauds.

With universal web access, robust cybersecurity and all-round financial inclusion still being distant dreams, it seems understandable why cash is still king despite the burgeoning popularity of digital payments. Although digital payments are definitely having a moment, they are far from taking over the entirety of India’s variegated economy. Even if India does go cashless someday, it will not be anytime soon.

While it is safe to conclude that India will not go cashless in the near future, that in no way means that digital payments don’t have a dazzling future ahead. In fact, from everything that’s lined up, it only seems likely to see greater success this year. 2019 saw India warm up to digital payment platforms with one of the most successful instances of gamification planned and executed by Google Pay during Diwali season.