- Government plans to launch the new cashless transactions without any extra cost for debit card holders
- Measures include compulsory use of credit cards for high-value payments, petrol pumps not to impose surcharge on debit card payments, forcing banks to install payment terminals in proportion to the number of cards they have issued, a two-year freeze on banks charging debit card fees and a preferential tax treatment for electronic payments.
- The action plan was outlined in a letter from the currency and coinage division, under the department of economic affairs in the finance ministry, to various regulators including the Reserve Bank of India, National Payments Corporation of India, tax authorities and other ministries.
- The letter speaks out the measures required, appropriate authority for the action and electronic payments by providing tax breaks in the form of lower GST for shoppers and lower income tax for merchants on card transactions, which is a Korean model.
- The moves include banks to install several lakh card acceptance machines across India, shops to pay card companies fixed fee instead of 1.5% of transaction, cards to be made compulsory for high value purchases, and banks to waive debit card charges for 2-3 years.
- “One of the measures that could be addressed fast is the installation of point of sales terminals to increase acceptance of cards. In India, the number of merchant establishments accepting cards is very low. Even Brazil which has a much smaller population than India has over 9 million card accepting machines as against 1.1 million in India,” said A P Hota, MD & CEO of National Payments Corporation.
- The government wants to give targets for installing credit card accepting machines that are proportionate to the cards of the banks have issued 20 lakh cards.