GUIDESPERSONAL FINANCE
GUIDES
Remember those days when your wallet was too full — bursting with crumpled notes and jingling coins? How every visit to the ATM felt like a side quest? And do not forget the hurried counting of the cash outside the kiosks while double-checking your surroundings!
But, is the adage' Cash is King' true anymore? According to a September 2024 Economic Times report, Unified Payments Interface (UPI) saw an impressive 57% YoY growth in transaction volume, surpassing 131 billion transactions. Handling over 15,537 crore transactions in 2024 alone, UPI has promoted financial inclusion by reducing the informal economy and shrinking black money.
The convenience that UPI, Debit/Credit cards, and buy-now-pay-later (BNPL) apps offer outweighs the advantages cash transactions bring. And maybe, just maybe, these easy transactions make it feel like we've lost touch with how much we're actually spending.
If you ask me, the poignant emotional quotient that cash triggers is guilt! "When did my money slip away so fast?" A sentiment that helped me curb impulsive spending.
Although cash has a certain nostalgia attached to it, numbers suggest we're okay with leaving behind the emotion and swapping leather wallets for smartphones. As per data shared by the National Payments Corporation of India (NPCI), since the beginning of October 2024, UPI has been recording more than 500 million transactions daily. This number was around 380 million on average last year. UPI adoption has gone up 34% during festive weeks across the years.
But here's where I want to pause and say: the "appification of payments" may make spending seamless, but it doesn't make you a careless spender! Instead, it helps you regain control/security of your money in ways no one had imagined. Here's how.
While handing over cash can feel tangible, relying solely on it has practical constraints. Carrying cash means bulky wallets, a constant need for small change, and an unlimited release of spend-induced “happy” hormones.
In contrast, digital payment apps offer built-in spending controls that keep you in check! According to the latest NPCI guidelines, most UPI apps cap the number of transactions to 10 per day and amount transfers at ₹1 lakh, effectively limiting overspending. Plus, you can set daily, weekly, or monthly limits on your spending through most UPI/ BNPL apps.
Gone are the days when you needed calculators and journals to record each expense and realise your budget has skyrocketed manually. With digital systems constantly monitoring your spending behaviour, you can now manage your finances categorically.
For instance, money management apps like Fi let you track each transaction's "when, where, and how", giving you insights anytime, anywhere. Whether it's a ₹30 auto ride or a ₹30,000 shopping spree, each expense gets logged with detailed information, including merchant names, transaction times, and even spending categories like travel, groceries, commute, and dining. It's a level of financial clarity that is difficult to achieve while dealing with cash.
In essence, many digital payment platforms incorporate budgeting features that allow users to allocate specific amounts for selected categories - a proactive approach to mindful spending.
Digital payments diminish the possibility of losing money since they are not physical. Unlike cash, which can easily be lost or stolen without any means of recovery, digital transactions provide multiple layers of protection. Security features like two-factor authentication, biometric verification, and real-time fraud detection reduce the risk of unauthorised activities. Also, India's regulatory authority continuously updates its security protocols to ensure top-notch security for digital natives.
An August 2024 Times of India report highlighted the central bank's new framework to strengthen payment security through Additional Factor Authentication (AFA). This framework enables banks and financial institutions to take a risk-based approach, factoring in transaction value, origin channels, and customer or beneficiary risk profiles. Such updated, robust security measures are nearly impossible to guarantee with cash.
Beyond reshaping spending behaviour, digital payments are vital in advancing financial inclusion. According to the World Bank’s 2021 Global Findex report, nearly 40% of India’s adult population now uses digital payments—a sharp rise, thanks to UPI and mobile banking. UPI, for instance, allows easy payments to house help or local vendors without needing a formal bank account or ATM visit. Digital wallets and UPIs also connect people in remote areas to banking services. It enables financial security in emergencies by providing access to micro-loans, even for those without traditional credit histories.
Sure, cash still has that old-school appeal, but that doesn’t mean it is the ideal way to go forward. Digital spending doesn’t remove the “sting” of paying; instead, it offers a more subtle but constant check-in with every transaction notification, monthly statement, and spending summary. These serve as little nudges to reflect on your habits, helping you become more aware without the shock factor of seeing cash disappear. Therefore, finding the right balance in harnessing the best of both worlds should be the key to a seamless payment journey.
Disclaimer: Views expressed here are solely those of the author and do not necessarily reflect the views of the brand, Fi Money.
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