What’s missing in digital money? Cultural acceptance, maybe
For a cash-heavy society no one expects a full transition to digital money, however adoption can change dramatically if digital money starts trickling into cultural and social aspects of life. There is a need to create visual symbols of digital cash which can begin to replace the current cultural value of cash.analysis Updated: Jan 18, 2017 23:08 IST
For generations now, hard currency was not just a store of value but it has value by itself. In the mind of a farmer or a day labourer a bunch of notes is the equivalent of a season’s crop or a day’s work or a bag of grain for the family. Notes have a visual meaning even if they lie, without safety, below the mattress or in the cupboard of the house, in rural India. If anything changed in the visual meaning it was only the relative nostalgic value (i.e. what could a ₹10 note buy a person 20 years ago v/s what it buys now).
The visual impact of currency has also been part of the cultural front. As an example, the prevalence of gifting odd numbered denominations (₹ 51, 101, 501 etc.) at weddings and other events as indicators of relative social standing is commonplace in several parts of India. The recognition that such denominations are ‘auspicious’ is taken for granted. In parts of north India, a mistaken touch of a man’s leg to a note is followed by touching it to the forehead to ‘cleanse’ it. Currency notes are still part of worship at festivals among certain communities.
Numbers in an e-wallet or smartphone clearly do not have the same cultural significance, yet. The current challenge with digital money, which has received significant spurt in volumes post the recent demonetisation, is that it remains at the level of basic awareness in many parts of the Indian hinterland.
In one stroke, demonetisation has shifted gears for digital money from discretionary, urban focused spends to more pervasive low volume daily spends across the spectrum, primarily due to relative shortage of alternatives. The persistence of this change remains to be seen. Doubtless, there are important economic benefits (move from informal to formal sector, increase in tax base etc.) and by banks and digital operators for its convenience and usage based benefits. The pitch is so far on utilitarian grounds, in essence. At least in rural and semi-urban areas, the cultural and social role of hard currency is yet to be fully tapped.
The relevance of the cultural linkage and the rootedness of cash lies in the speed and manner which any alternative digital format will get accepted in the hinterland of India where even the utilitarian aspects of digital money are limited as of now. For a cash-heavy society no one expects a full transition to digital money, however adoption can change dramatically if digital money starts trickling into cultural and social aspects of life. This is made harder by the fact that cash has been there for generations as an indicator of wealth, prosperity and social standing. Except for the current generation, no one has seen or experienced an alternative form of cash such as credit/ debit cards which have picked up pace only over the last decade or less.
A parallel can be drawn from the fate of e-book readers like Kindle, in India and its impact on printed books and publications. While the e-book reader has begun making inroads largely in urban areas, the traditional printed book remains a dominant medium across the country. Even if the cost of e-book readers is ignored, the strong cultural and social connect between readers and printed books has played a silent role in the relatively slow adoption of e-readers.
Getting digital money deeper into the cultural milieu especially in rural and semi-urban areas will not be easy, especially now – when the effort is first to create basic comfort and acceptance of the medium. Cultural acceptance is clearly a second stage but an important stage. It would at the least involve a mapping of symbols and references around cash. There could be a need to create visual symbols or representations of digital cash which can begin to replace the current cultural value of cash. It may also mean creating completely new cultural symbols around digital money. The process of cultural assimilation of digital cash could be prolonged but it would result in a more sustained usage environment over time.
Nilesh Shrivastava heads the financial institutions investments portfolio for IFC in South Asia covering India, Bangladesh, Sri Lanka and other countries. The views expressed in this piece are personal.