The urge to go cashless has been witnessed for some time now. The entry of different digital wallets & companies like Paytm, MobiKwik etc. has further fueled the development of the digital payment sector. The Union Cabinet is thinking on the similar lines to help people go cashless in the favor of digital payments.
The year 2016 can transpire to be a big one for the digital payments industry. There has been an increase in the number of banks & all the newly emerged banks will start the operations in 2016. The consumer would be spoilt for choice, with soon many options available in the market. We already witnessed a major chunk of people switching allegiance towards digital payments in 2015. However, this year, the sector is poised to grow even faster. Not just the companies, the government is also pulling some strings to ease the process of going cashless in the country. Taking cognizance of the digital payment phenomenon, the government is designing several initiatives that can help the people reap maximum benefits. Along with unveiling the plan to equip 6 Lac villages with 20 Lac POS terminals, the last mile delivery is also going to improve. Last week, the Union Cabinet also approved the withdrawal of surcharge, service charge and the convenience fee on digital payments. The Cabinet chaired by Prime Minister Narendra Modi also approved mandating payments beyond a prescribed threshold only through a card or digital mode. Along with this, the government has also made its plans clear to include rationalization of Merchant Discount Rate (MDR) on card transactions & creation of a differentiated MDR framework for other key segments. Creation of necessary assurance mechanisms for quick resolution of fraudulent transactions and reviewing the payments ecosystem in the country have also been approved. A couple of days, news broke out that Paytm is planning to unveil the first blueprint of its payments bank in March. The company has also roped in Shinjini Kumar, a former Reserve Bank official and senior executive at PricewaterhouseCoopers as the CEO of the bank. All these developments will help the digital payments sector to further develop. The government is looking to reward via starting such measures and incentivizing card payments.
The Union Cabinet released an official statement about the development, it 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, organizations.” The statement further read, “The promotion of payments through cards and digital means will be instrumental in reducing tax avoidance, migration of government payments and collections to cashless mode. The move primarily discourages transactions in cash by providing access to financial payment services to citizens to pay through cards and digital means and shifting payment ecosystem from cash dominated to non-cash or less cash payments.”