Demonetization is a process of stripping down a particular currency as a legal tender act as a link between the process of digitalization and cashless economy. The paper discusses about digitalization and demonetization along with the transition from paper economy towards the cashless economy and ways, means, obstacles in this process. The Digital India programme is a flagship programme of the Government of India with a vision to transform India into a digitally empowered economy “Faceless, Paperless, Cashless” is one of professed role of Digital India. The concept is conceptual in nature and data collected is majorly from secondary sources. Major concern is given to the benefits, challenges and ways to achieve cashless economy. Demonetization has brought with it many pros and cons but it has served as a way to make people aware about the different sources of transaction making them digitally literate and taking them one step forward to the new era of life. With pain and suffering like shortage of money in banks, ATM’s, long queues etc. But there have been gains where in which people got some sort of confidence in using these different apps for making transactions in financial matters as they were left out with no options. Making economy cashless is one of the noble tasks in the phase of economic development but is a tiring effort which may go in wane if not implemented and monitored by the concerned authorities. Going completely cashless is like having a dream come true as no country in the world is completely called as a cashless economy.