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Vandana
Vandana

BUDGET 2018

Budget 2018 may give impetus for digital transactions

digital-payment Representational image | File

One of the key features of Narendra Modi government has been its thrust on digitisation. And, Budget 2018 will play a major role in deciding how serious the government is towards digital India and cashless transactions. In fact, it was one among the several arguments stated in favour of demonetisation. It did help with volumes of cashless transactions surging several times, but gaps remain.

The government announced several digital transaction-friendly measures in the last budget. A cashback scheme for merchants on the BHIM app, withdrawal of service charge on railway tickets and Aadhaar-enabled payment system were some of the measures. Experts suggest that this budget should take these moves forward and incentivise digital transactions.

"Some sort of incentive needs to be provided for digital payment ecosystem providers for expansion of POS/digital transfer infrastructure beyond metros/tier 1 cities to improve accessibility in these areas. Additionally, a complete removal of surcharges on digital payment modes through government portals for NPS, IRCTC, PSU entities will encourage cashless transactions in this domain", says Adhil Shetty, CEO, Bankbazaar.

Experts also suggest increasing the referral bonus on UPI and BHIM apps to promote digital payments. Last year in July, banks and the National Payments Corporation of India had asked the finance ministry to increase the referral bonus on these payments apps. Currently, any person who refers BHIM to another gets Rs 10 as an incentive, however, NPCI wanted the referral bonus to be increased to Rs 25. 

Over the last few years, government and financial sector regulators have taken various steps to digitise the KYC verification process through Aadhaar, digital signature, etc. However, there are still quite a few government departments that rely on physical documents for KYC. This results in redundancies, which in turn makes the system inefficient.

"It’s time to show full faith by both government and regulators to show their 100 per cent confidence in the digital process and no additional need to have physical documentation to be obtained additionally in a year,” said Payments Council of India, an association of digital payment companies.

Despite the industry’s phenomenal growth,  Payments Council believes that there is still a lot of scope for building a robust acceptance infrastructure in India. “The upcoming budget must take steps in this direction. One such step would be creation of an acceptance development fund. This is akin to any market development fund set up by new businesses to create awareness and build a repeat-use customer base", said a note on their budget expectations.

“On similar lines, acceptance development fund can incentivise merchants, banks, payment processors to enable digital payments at grassroot levels and conduct mass education campaigns to promote awareness and benefits of digital payments,” the industry body added. 

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