The central government’s ambitious plan to make digital payments equal to offline payments and incentivize them has got a thunderous response from the industry.
The industry is looking at this plan as an important measure to realize India's ambitions towards a cashless or a less cash economy.
As per industry experts, these measures, once operationalized, will help increase tax compliance by creating an electronic trail, which will also reduce the cost of handling cash in the system and habituate consumers for making digital payments wherever they can.
Vijay Shekhar Sharma, CEO of digital payment firm Paytm is of the view that consumers were being punished for paying through their cards or wallets.
"Paying digitally was costing more for the consumers, it was criminal," he told ET.
If data is to be believed, Indian economy is amongst the most cash-intensive economies in the world, with a cash to GDP ratio of 12%. This is 3 to 4 times more than comparable economies like Brazil and South Africa.
This adds pressure on the government, in the form of the cost of managing this high cash dependence. This cost goes up to over Rs. 20,000 crore in the formal banking system and much more in the entire economy.
As preventive measure, the cabinet has approved the plan that promises introduction of steps for promotion of payments through cards and digital means. This move would also help weed out black money menace by changing the cash-dominated payment ecosystem.
The plans include withdrawing surcharge or service charge or convenience fee on card and digital payments, rationalization of telecom service charges for digital transactions, promotion of mobile banking and creation of necessary assurance mechanism for quick resolution of fraudulent transactions.
Image source
