The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the withdrawal of surcharge, service charge and convenience fee imposed by different government departments and organizations on card and digital payments.
This step has been taken with the view of discouraging cash transactions. The cabinet also approved mandating card or digital payments beyond a given threshold.
“The promotion of payments through cards and digital means will be instrumental in reducing tax avoidance, migration of government payments and collections to cashless mode,” said an official statement.
The government will also rationalise the Merchant Discount Rate (MDR) — the fee charged by a bank for debit and credit card services. Other steps being taken to reduce cash transactions include rationalization of telecom service charges for digital transactions, introduction of appropriate acceptance infrastructure in government departments and promotion of mobile banking. To solve cases of fraudulent transactions without any delay, assurance mechanisms will be created and the payment ecosystem in the country will be reviewed for further improvements.
The government stated that several short term and medium term measures have been approved for implementation within one year and two years, respectively.