A STUDY OF CASHLESS TRANSACTION BEHAVIOR OF BANK CUSTOMERS IN DISTRICT MATHURA, UP

There are many substitutes for cash in the modern economy ranging from debit cards, pre-paid cards, credit cards and mobile wallets. When compared to cash, these instruments differ in a number of key characteristics. Temporal separation or degree of coupling is the extent to which a purchase and the payment for the transaction from resources are separated in time. If the two are de-coupled, people may not perceive a sense of separation from money at the time of incurring the expenditure and hence may overspend. The second characteristic is related to the pain of payment flowing from salience. It is argued that people perceive the pain of payment depending on the tangibility or salience of the outflow. A third feature is the stringency of budget constraint –while cash limits one's ability to spend to the amount of cash in hand, a debit card expands it to the balances available in the account and a credit card further relaxes it to include future earnings as well. The study is based on the survey of the behavior of 200 bank customers at district Mathura, Uttar Pradesh (Interacting with different Banks of the district). Literate/educated and young respondents are found interested towards cashless transaction in comparison to illiterate and old aged respondents. In a comparison of debit cards with cash, studies suggest that with the use of debit cards, the level of consumption tends to be higher. In a comparison of credit cards with cash, this effect is more pronounced. Credit cards often are associated with more spending resulting in an increase in debt as well. The demonetization undertaken by the government is a large shock to the economy. The impact of the shock in the medium term is a function of how much of the currency will be replaced at the end of the replacement process and the extent to which currency in circulation is extinguished. While it has been argued that the cash that would be extinguished would be “black money” and hence, should be rightfully extinguished to set right the perverse incentive structure in the economy, this argument is based on impressions rather than on facts. While the facts are not available to anybody, it would be foolhardy to argue that this is the only possibility. As argued above, it is possible that these cash balances were used as a medium of exchange.