In a major development, Government has removed every type of service charge & surcharge applicable on cashless payments. This is seen as the biggest push for promoting digital/card based payments in India.
Earlier this year, we had reported that how cashless payments have overtaken paper based payments across India; and after this recent announcement, a new revolution of cashless transactions shall be ignited. Last year in December, Government had made another big decision by making it mandatory for all Government related transactions above Rs 1000 to be made cashless.
It may be noted here that cash transactions are actually very expensive, as 5-7% of our GDP is spent in maintaining the records, currencies and other expenses. By promoting and encouraging cashless transactions, we are actually becoming richer and wealthier!
Besides, more cashless payments will convert to higher tax payments and more financial inclusion.
The recent decision to abolish surcharge and service charge on cashless payments was approved by the Cabinet, which was headed by PM Modi.
The official statement from the Govt. said, “The essential features of the proposals for promotion of payments through cards and digital means include steps for withdrawal of surcharge, service charge and convenience fee on card and digital payments currently imposed by various government departments, organisations..”
Some other crucial decisions which were approved for promoting cashless transactions include:
- Merchant Discount Rate (MDR) on card transactions would be now rationalized and a differentiated MDR framework for some key industries would be proposed
- Formula-linked acceptance infrastructure by the stakeholders of certain card products
- Rationalized telecom service charges for digital financial transactions
- Promoting mobile banking among rural customers
- Creation of a special department to check fraud activities and ensuring quick action on such incidents
- Complete review of payments ecosystem in the country
Earlier this week, Govt. had announced the implementation of Unified Payment Interface across India, which has the potential to kill mobile wallets in India.
Going by the reports, it seems that the present Government is serious about cashless transactions, and in the coming Union Budget, we may witness some more fireworks in this direction.
Some other cashless payments related news we covered: