Debit card holders can expect to use them at more places and without any extra cost as the government plans to launch a new action plan to popularize cashless transactions. What is expected to give it a fillip is the large debit card user base, especially since the Centre's Jan Dhan Yojana has ensured that most employed Indians have one.
Measures on the anvil include compulsory use of cards for high-value payments, asking oil companies that control petrol pumps to stop imposing a surcharge on debit card payments, forcing banks to install payment terminals in proportion to the number of cards they have issued, a two-year freeze on banks charging debit card fees and a preferential tax treatment for electronic payments.
The action plan was outlined in a letter from the currency and coinage division, under the department of economic affairs in the finance ministry, to various regulators including the Reserve Bank of India, National Payments Corporation of India, tax authorities and other ministries. The communication spells out the measures required and the appropriate authority for that action. The letter also speaks of the Korean model where the government promoted electronic payments by providing taxfor merchants on card transactions.
According to AP Hota, MD & CEO of National Payments Corporation: "One of the measures that could be addressed fast is the installation of point of sales (PoS) terminals to increase acceptance of cards. In India, the number of merchant establishments accepting cards is very low. Even Brazil which has a much smaller population than India has over 9 million card accepting machines as against 1.1 million in India."
While the machines are a one-time expenditure, card issuing banks will have to take a bigger cut on what they earn from shopkeepers by way of interchange fee. The interchange fee is what the bank deducts from the amount swiped from the customers account before crediting it to the shopkeepers account. Under the new regime proposed in the circular, instead of 1.5% of transaction value banks will deduct a flat fee which will be a few rupees. This will give merchants lesser reasons for rejecting pay ..
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