A cashless economy or an e-payment system is a situation where there is little or very low cash flow in a given society, thus every other purchases and transactions will be made by electronic channels, examples of which are direct debit, electronic funds transfer, mobile payments, multi-functional ATMs, internet banking and a significant increase in point of sale (POS) penetration and usage. In other words, it simply refers to the widespread application of information technology in the financial system. Payments under this new system will range from a list of options such as cheques, wire transfers, debit and credit cards, online transactions, and mobile banking. The advantages of a cashless society are enormous; from regulating, controlling, and securing the financial system of any economy. In this context, the present paper makes an attempt to study the present scenario of cashless economy in India, to identify the challenges to cashless economy, to know the benefits of cashless policy and make recommendations to bank for cashless banking.

KEY WORDS: Cashless Economy, point of sale (POS), Automated Teller Machine (ATM)