The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the introduction of steps to promote payments through cards and digital means and reduce cash transactions. A number of short term (within one year) and medium term measures (within two years) have been approved for implementation by the Government Ministries/ Departments/ Organisations.
This mode of payment will be helpful in reducing tax avoidance, migration of Government payments and collections to cashless mode. It will shift payment ecosystem from cash dominated to non-cash/less cash payments.
The essential features of the proposals for promotion of payments through cards and digital means include steps for:
- withdrawal of surcharge/service charge/ convenience fee on card/ digital payments currently imposed by various Government Departments/organisations and introduction of appropriate acceptance infrastructure in Government Departments/ organisations;
- rationalization of Merchant Discount Rate (MDR) on card transactions and a differentiated MDR framework for some key transaction segments;
- mandating payments beyond a prescribed limit only in card/ digital mode;
- introduction of formulae linked acceptance infrastructure by the stakeholders of certain card products;
- rationalisation of telecom service charges for digital financial transactions;
- promotion of mobile banking;
- and creation of necessary assurance mechanisms for quick resolution of fraudulent transactions and review the payments ecosystem in the country.