Digital divideDigital transactions are here to stay whether we like it or not.
The internet has come a long way. Gone are the days when the crackly sound of the dial-up connection hogged the phone line. Due to advancements in internet technology, primarily with broadband and the likes of 4G and now 5G, the world has seen seismic shifts in how we work, interact and operate. This technological shift has propped up numerous businesses revolving around the internet. None more so than digital platforms that allow people to transfer money within seconds with a tap on their phone. And the current pandemic has been nothing short of a godsend for such platforms. What may have casually taken a decade to catch on virtually forced people to accept the technology or face the perils and predicaments of the old order riddled with obstacles.
The cashless system had finally managed to knock the old ways of transacting right off its perch. Transactions based on the exchange of banknotes no longer proved to be attractive, primarily because of fears that cash could carry the virus. Nepal, therefore, has had to accept the reality of this transformation somewhat unwittingly. And rather than falling back on the old ways, the digital platforms in Nepal saw a 94 percent year-on-year jump. While the convenience of paying online is an attractive option, it’s an option inherent with caveats.
To begin with, Nepal suffers from glaring infrastructural deficiencies despite the rising trend in internet usage; the reach is mostly limited to urban areas. Awareness in operating the applications to conduct transactions is often limited to those able to afford the device. With a gross national income of $1,191 per annum in 2020, very few people in Nepal are in a position to afford smartphones which primarily cost in excess of $100, or about twelve thousand rupees. Financial limitations coupled with poor but expensive internet service hampered the expansive reach of digital payment services. Despite this limitation, there has been a year-on-year increase.
The digitalisation of payments would eliminate many such ills prevalent with fiat currency. The counterfeit money allowed to flood the market tends to disrupt genuine economic activity and pushes up inflation due to the larger amount of notes in circulation. The central bank can usually contain economic ills by carefully monitoring digital currency. The trail left by digital transactions can also effectively prevent the rampant corruption that prevails in countries like Nepal, which usually fares low on the transparency index.
Despite the seeming advantages, a complete switch would mean leaving behind vast sections of society that have neither any interest in technological advances nor the will to abandon the existing ways of transacting. Old habits die hard. However, the future of a cashless society is bulldozing its way into our lives. As the old order gives way to the new, digital transactions are here to stay whether we like it or not. It would be wise to accept this reality and define the terms to serve our future better.