Is Cash Still the Enemy? The Dampening of Demonetization’s Ripple Effect on Mobile Payments

Technology diffusion has often been triggered unintendedly by crises and disasters, as witnessed in several cases including the demonetization cashcrisis surging mobile payment adoption in India. However, once the shock waves induced by the crisis event weakens over time, there exists a void that questions the sustenance of the technology whose diffusion was a ripple effect of the shock. This is seldom explored by the literature that focuses on the immediate aftermath of the crises. We address this limitation by examining the cash withdrawal patterns from ATMs in India post-demonetization for a continuous period of three years. The results provide strong empirical evidence to support our claims towards the dampening of demonetizations’ ripple effect on mobile payments. The theoretical contributions of the study add further to the existing literature on technology diffusion and technology adoption post-crises with a focus on the digital payment systems. The findings have implications for policymakers and government concerned with the digital economy, with cash emerging as an enemy overshadowing the growth of digital payment methods.