Govt Banks on Incentivising to Boost Digital Payment


The industry has backed government’s move to incentivize cashless payments saying the benefits passed on to consumers will give a booster of growth to fintech or digital payment companies.

According to the release, NITI Aayog has enlisted a series of incentives for the communication campaign for the district authorities and administration to promote the transition to the cashless digital payment systems. These include incentives for digital payments for day to day financial transactions like buying or selling goods/services, transferring money etc.

Digital Boost Across India

NITI Aayog will provide logistic support for outreach activities at the district, taluka and panchayat level in form of the seed money of Rs.5 lakh per district administration as a part of the communication campaign. The purpose is to enhance the seeding of Mobile and Aadhar numbers to the bank account, issue of Rupay cards wherever necessary, issue of PIN wherever necessary, downloading of app wherever necessary and finally achieving two successful transactions.

A PIB release said, “With a view to provide logistic support to the IEC activities- information, education and communication, holding camps for transiting to the digital mode of payment, the Government has undertaken a series of measures to provide incentives to the district administration which will give a boost to cashless digital payment systems across the districts, talukas and panchayats.”

Moreover, the top ten best performing districts will be awarded the “Digital Payment Champions of India” award, while the first 50 Panchayats which go cashless will be awarded Digital Payment Award of Honour.

“This is the first major effort to directly incentivize the customer for using digital instruments as opposed to the practice of disincentivizing them,” Internet and Mobile Association of India President Subho Ray said.

PSU companies will cost less now

Petrol, railway tickets and insurance policies of PSU companies will cost less now if bought through debit/credit cards or other digital modes, the government today said while announcing a slew of measures to incentivize cashless payments.

  • Finance Minister Arun Jaitley announced that a discount of 0.75 per cent will be offered on purchase of petrol and diesel through either credit/debit cards, e-wallets and mobile wallets. This would translate into a discount of 49 paise per litre of petrol that is currently sold at Rs 66.10 in Delhi. Similarly on diesel, it would mean a saving of 41 paise on every litre bought at Rs 54.57.
  • Similarly, 10 per cent and 8 per cent discount will be offered in case of general and life insurance for buying new policy or paying premium online via PSUs websites.
  • Announcing 11 decisions to promote digital transactions, he said that monthly and seasonal suburban railway tickets purchased through digital mode will get 0.5 per cent discount from January 1.
  • Online booking of railway tickets will get up to Rs 10 lakh of free accidental insurance cover. Those using digital mode to pay for railway catering, accommodation, retiring room will be entitled to discount of 5 per cent.
  • The Minister further said 10 per cent discount will be available on use of digital mode for paying for RFID or fast-tags for highway toll.
  • The cost of these discounts, Jaitley said, “will be borne by each of the organization because most of these discounts are offered by the bodies which are run by Central Government or are PSU units”.
  • The Government, he said, is targeting at least 70 per cent of the daily sales to be through cards or e-wallets/mobile wallets to reduce cash exchange at petrol pumps by nearly Rs 2 lakh crore annually.

Support to Merchant Transactions

  • Public sector banks have been advised that merchants should not be required to pay more than Rs 100 as monthly rental for PoS terminals/Micro ATMs/mobile POS so as to bring small merchants on board the digital payment ecosystem.
  • The move will benefit about 6.5 lakh machines supplied by public sector banks to merchants. With lower rentals, more merchants will install such machines and promote digital transactions.
  • In order to expand digital payment infrastructure in rural areas, the Government through NABARD will extend financial support to eligible banks for deployment of 2 POS devices each in 1 lakh villages with population of less than 10,000.
  • “These POS machines are intended to be deployed at primary cooperative societies/milk societies/agricultural input dealers to facilitate agri-related transactions through digital means,” he said.
  • The move will help cover population of nearly 75 crore, enabling them to transact cashless in their villages for their agri needs.

The time is ripe for Indian companies to pursue digitalization whereby digitized resources, such as cloud-based software and machines equipped with digital sensors, are transformed into new sources of profitable revenue. The recent government steps goes in line with the expected maturity of various components of the digital ecosystem in India including the digitized consumer, generation of digital data volumes, e-commerce and tech-savvy talent pools.