Nagpur: Making a strong pitch for promotion of electronic payments in the Country for making India a less cash economy,the Confederation of All India Traders (CAIT) has urged the Union Finance Minister Arun Jaitley to advise Reserve Bank of India to scrap levy of transaction charges on usage of digital payments and rather the Government should subsidies such charges to the Banks directly. Transaction charges are one of the major deterrent in adoption of digital payments in the Country and as such neither the merchant and nor the Consumer is burdened with transaction charges.
Going one step further, the CAIT has also suggested the Government to levy a nominal ATM usgae surcharge in order to discourage people to withdraw cash from ATMs . On the other hand, the Government should frame a comprehensive incentive policy for the persons and business entities using digital payments and beside all sorts of debit and credit cards all other mode of digital payments including POS terminals, M-POS, mobile wallets, mobile applications, QR code, UPI & Aadhar enabled applications should be brought under the ambit of incentive schemes. The CAIT has sought an appointment with Union Finance Minister to discuss the proposals in details.
The CAIT has also suggested to form a Digital Payment Promotion Board comprising of senior officials and representatives of traders and consumers and in accordance with the recommendations of Wattal Committee an independent Payments Regulatory Board should be set up. The Non Banking Finance Companies & Micro Finance Institutions should also be brought under the landscape of digital payments to install white label POS terminals by encouraging a scheme to subsidize POS terminals directly or indirectly across both urban and rural areas.
CAIT National President B.C.Bhartia & Secretary General Praveen Khandelwal said the Government has drafted an incentive proposal in August,2015 which spells out certain tax benefits and waiver of transaction costs charged by Banks. While urging the Government to implement said proposals, the CAIT said that proposal to provide incentives to shopkeepers accepting payments in business transactions through digital payments will encourage traders to embrace e-payment system. Both Bhartia & Khandelwal while citing a report of United States Agency for International Development (USAID) in context of payment landscape of India said that about 97% retail transactions are done in cash whereas only 11% consumers use debit card for payment and merely 6% merchants in India accept electronic payments. The report further says that 82% customers are unaware about making transactions through mobile whereas about 79% customers are unaware about online banking. About 89% merchants are in favour of using debit card. The most important reasons for merchants not adopting electronic payment system includes lack of awareness among them about electronic payments.
India is predominantly a cash-based economy, with less than 5 per cent of Personal Consumption Expenditure (PCE) of INR 70,000 crore transacted by electronically payments. Those cards are used almost entirely at ATMs rather than at the point of sale (a ratio of 10 cash transactions to 1 at the point of sale). Considering just currency, the ratio of currency to GDP in India (12.2%) is higher than countries such as Russia (11.9%), Brazil (4.1%) and Mexico (5.7%). It is an admitted fact that true value of electronic transactions is maximized when cards are used at the point of sale, rather than as a transactional tool to withdraw cash.