From cowries and coins to colourless, cashless
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Exactly 10 years ago I had the strangest experience while riding a streetcar in Helsinki. I was dipping my hand into my pocket to fish out change to pay the driver, when my host Marko waved me off, saying he’d pay my fare through his phone. Pay through your phone. It had seemed so weird to me then. I didn’t even get any ticket or paper receipt as evidence that my ride had actually been paid for. Later that week I noticed young people setting out for the day with no cash in their pocket at all, just their phone. This future will now be ours, apparently, according to statements emerging from the finance ministry, the Reserve Bank of India (RBI) and the former chairman of the Unique Identification Authority of India, Nandan Nilekani. Moreover, the way that we’re going to get there is to first get used to not having any money in our pockets at all.
People need to get used to this idea. For thousands of years we’ve been using gold, silver and copper coins. Before that black pearls, shiny seashells or cowries, anything small, rare and durable to be a locus of value and a token of exchange. Beginning about 500 hundred years ago, humans invented pieces of paper marked by the sovereign as fungible, exchangeable units of value. Today we no longer read books made of paper, so why should our currency still be a paper artefact liable to be torn, burnt, or lost in the laundry? Over the longer term, one must concede that the advocates of digital currency are right, at least in the broad-strokes. By the end of our lives, we should fully expect to never touch or count currency bills of any denomination in any country of the world. This change is coming and we must lead it, not fight it.
Urban India has already given over to digital transactions in many ways. You can show your boarding pass on your phone to enter the airport, but of course you do need a paper version to get stamped at security. But you might use BookMyShow to reserve your movie tickets and waltz in waving your phone screen. Our economy weaves and dances between the digital and the paper-based because we have to shift all of our rituals of record-keeping, validation and back-ups entirely to the digital. So long as most of our society remained offline and only a few early adopters had gone digital, one would expect things to remain in this kind of middling, transitional stasis. But now that some 200 million Indians have data-connected smartphones, it would seem like the tide is turning away from paper and from cash. One can understand the impatience of the Aadhaar crowd and India’s fintech start-ups. Why stay bogged down to the legacy of cash when it’s clear that the future is digital?
This is more or less the advice that Clayton Christensen offered in his book The Innovator’s Dilemma. Large organizations are weighed down by legacy systems that perpetuate old investments, preventing newer innovations from being adopted and new business ideas from being developed. Decision-makers may therefore be forced to strangle their existing business in order to give birth to a new and profitable enterprise. The best example has been Netflix, which not only came about as a mail-order challenger to the retail store model of Blockbuster, but then discontinued its own mail-order model to launch a globally successful streaming business. But if Netflix was able to ride the edge of that wave from the physical to the digital, this was because it was able to navigate a perfect storm of changing user needs and expectations, increasing Internet speeds and the new availability of digital surfaces like the iPad. Are we at a similar pivotal moment with our national currency?
In the immediate term, the answer is no. We don’t have the retailers, the street-side vendors, the agricultural supply chains, the rural connectivity of power and data in place to completely make this transition at present. And so RBI must continue to support both old and new paradigms of its currency service to support the wide variety of users it must serve. At the same time, it can add new features and incentives to aid, invite and nudge us into transitioning to the digital, perhaps in the same persistent and mildly annoying ways that Facebook got us to instal Messenger some time ago.
This kind of continuous positive engagement with the users of currency is likely to pay far better dividends than the sudden disruption of service that was announced on 8 November. If we must all change our long-standing expectations and behaviours of how to deal with money, then perhaps the way to best do this is through empathy, support and design, rather than through force and coercion.
Aditya Dev Sood runs Startup Tunnel, which accelerates start-ups that solve real world problems, making life easier and better for all people. He tweets from @adityadevsood
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