Union Cabinet approved Promotion of Payments through Cards and Digital means

Under the move no surcharge, service charge, convenience fee will be levied on card and digital payment.

Created On: Feb 25, 2016 15:15 ISTModified On: Feb 25, 2016 15:53 IST

Union Government on 24 February 2016 approved introduction of steps for promotion of payments through cards and digital means. The move aims at reducing cash transactions.

Under the move no surcharge, service charge, convenience fee will be levied on card and digital payment. Steps will be taken for payments beyond a prescribed threshold mandatory through cards or digital mode.

As per the decision, several short term (to be implemented within one year) and medium term (one year to two years) by the Government Ministries/ Departments/ Organisations.

Major highlights of promotion of payments through cards and digital means
• It will be instrumental in reducing tax avoidance, migration of Government payments and collections to cashless mode

• It will discourage transactions in cash by providing access to financial payment services to the citizens to conduct transactions through card/digital means

• It will help in shifting payment ecosystem from cash dominated to non-cash/less cash payments

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 threshold 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

• Creation of necessary assurance mechanisms for quick resolution of fraudulent transactions and review the payments ecosystem in the country

In this direction, Union Government and Reserve Bank of India (RBI) in the past have taken several initiatives so as to make transition from cash payment to cashless payment through use of cards and digital mode.

In 2007, Union Government notified the Payment and Settlement Systems Act which has resulted in deeper acceptance and penetration of modern card/ digital payment systems in the country.

Further, Aadhaar Enabled Payment Systems (AEPS) has been brought to effect to leverage upon biometric verification and a domestic card network namely, RuPay.

RBI recently approved giving licences for setting up of Payments Banks with the objective of greater financial inclusion through providing small savings accounts and payments/remittance services to migrant labour workforce, low income households, small businesses and other unorganised sector entities.

RBI released guidelines for Licensing of Payments Banks

Now get latest Current Affairs on mobile, Download # 1  Current Affairs App

Take Weekly Tests on app for exam prep and compete with others. Download Current Affairs and GK app

एग्जाम की तैयारी के लिए ऐप पर वीकली टेस्ट लें और दूसरों के साथ प्रतिस्पर्धा करें। डाउनलोड करें करेंट अफेयर्स ऐप

Comment ()

Post Comment

2 + 0 =