Cash is difficult to protect because it is easy to transfer and its ownership difficult to prove
As the country moves towards a Show
environment after demonetisation, the initial awe and confusion have given way to a flurry of concerns. Will the emphasis on online transactions provide convenience and tangible benefits or just add to stress and additional charges? To incentivise the move towards a cashless economy, the government has come up with a rash of discounts and freebies on digital transactions. But will these be substantial enough and, along with other benefits, counter the higher risk of identity theft once the currency notes are back in circulation? What are the gains and drawbacks of financial digitisation? Here’s a look at what may be in store for you. ADVANTAGES OF GOING CASHLESS Convenience It will be especially useful in case of emergencies, say, in hospitals,” he says. Adds Jayant Pai, Head, Marketing, PPFAS Mutual Fund: “You have the freedom to transact whenever and wherever you want. You don’t have to be physically present to conduct a transaction or be forced to do so only during office hours.” Discounts Similarly, saving on rail tickets, highway toll, or purchase of insurance can help cut your costs. Add to these the cashback offers and discounts offered by mobile walletslike Paytm, as well as the reward points and loyalty benefits on existing credit and store cards, and it could help improve your cash flow marginally. Tracking spends Budget discipline Lower risk (finger prints, eye scan, etc), it can be extremely difficult to copy, making it a very safe option. Small gains GO DIGITAL, GET DISCOUNTS Service tax: Waiver of service tax of 15% on digital transactions up to `2,000. Fuel: 0.75% discount on digital purchase of fuel through credit/debit cards, e-wallets or mobile wallets. Rail tickets: 0.5% discount on monthly and seasonal suburban railway tickets from 1 January 2017. Online rail ticket buyers get up to `10 lakh free accident insurance too. Rail catering: 5% discount on digital payments for railway catering, accommodation, retiring rooms, etc. Highway toll: 10% discount on NH toll payment via RFID or fast-tags in 2016-17. Insurance: 10% discount by government general insurers on premium paid online via their portals. 8% discount on new LIC policies bought online via its site. POS: Rs 100 a month is the maximum rent that PSU banks can charge for PoS terminals. Rupay: Kisan credit card holders to get RuPay Kisan cards. DRAWBACKS OF DIGITAL TRANSACTIONS Higher risk of identity theft Besides, the latest move by the government to remove the two-factor authentication process for online transactions up to `2,000, will not help. Irrespective of the size of transaction, the absence of this additional layer of security will expose thousands to the risk of identity theft. Another weak link is the inadequate redressal mechanism. “With the poor redressal system in India, imagine what a poor rickshaw puller will do if he has his Aadhaar ID stolen?” asks Mumbaibased financial trainer P.V. Subramanyam. “Given the tedious process and poor grievance redressal, people will have no easy recourse if they lose money online,” adds Nagpal. There is no stringent legal process to deal with this kind or scale of fraud. Add to it the mass identity theft from banks’ or companies’ databases and it can turn into a financial nightmare akin to the data breach in the Indian banking system in October this year.
Losing phone Difficult for tech-unsavvy Overspending Besides, a high penetration of the digital payment system is contingent on the fact that the same amount of cash does not come back into circulation. If it does, people are more likely to switch back to the former ease of using cash as it is a habit that they may find difficult to break. Also Read: How you can help low-wage earners adapt to a cashless digital system Which of the following is an internal control procedure designed to protect cash receipts?Which of the following is an internal control procedure designed to protect cash receipts? checks facilitate the separation of duties associated with cash payments.
What would cause a bank statement not to agree with the cash balance in the accounting records?Reasons a Bank Balance Will Differ from a Company's Balance
Deposits in transit. Bank service charges and check printing charges. Errors on the company's books. Electronic charges and deposits that appear on the bank statement but are not yet recorded in the company's records.
Why must cash be subject to strict internal controls?Why must cash be subject to strict internal controls? Small quantities of cash can represent significant value. Cash has universal appeal. Rightful ownership of cash is difficult to prove.
When cash is received from sales the amount is recorded in the?Accounting Chapter 3. |