Government announces major reforms to promote less cash economy
This follows a recent cabinet note in which the government has suggested to remove surcharge, formulating a differentiated MDR framework, introduction of a formulae linked acceptance infrastructure for different stakeholders and incentivising digital transactions to promote less cash economy
In a major development, the government has notified that for government services, there will be no surcharge for card and online payments. This follows a recent cabinet note in which the government has suggested to remove surcharge, formulating a differentiated MDR framework, introduction of a formulae linked acceptance infrastructure for different stakeholders and incentivising digital transactions to promote less cash economy.
Besides, the government has also suggested mandating payments beyond a prescribed threshold only in card/ digital mode; 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.
The majority of the above recommendations were from Internet and Mobile Association of India (IAMAI) and Payments Council of India (PCI), and the association is delighted to welcome the positive and comprehensive steps taken by the government. The association hopes that a speedy implementation of all these recommendations will usher in more accountability, transparency and efficiency in the economy.
The industry body, in its recommendations to the Ministry of Finance in the ‘Draft Proposal for Facilitating Electronic Transactions’, had focused on government departments bearing MDR cost like other merchants, differentiated MDR framework for certain cash dominated sectors, having significant ticket sizes and generating considerable volumes of transactions, installing POS devices in proportion to cards issued and incentivizing the customers and merchants for adoption electronic payments among other things.
There is an optimistic and positive sentiment within the payment ecosystem and PCI hopes all these implementations collectively will boost transactional efficiency, reduce cost, improve transparency and accountability and drive financial inclusion.
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