Why move to digital payments? Govt lines up 11 new discounts

Exactly a month after the government announced the decommissioning of Rs 500 and Rs 1,000 notes, it has declared atleast ten different sops that the public can avail by switching to the digital payments mode. 

The country has been grappling with a shortage of cash after the demonetization move took out nearly Rs 14 lakh crore from the system in a single sweep. People have been lining up outside ATMs to withdraw cash within the temporary daily limits set by the government, or outside the banks to withdraw, deposit or exchange for usable tenders. 

While the move has already lead to a spike in the adoption of mobile and digital transactions, on Thursday, the government announced a slew of sops to give it a further push. 

"To further accelerate this process, the Central Government has decided on a package of incentives and maesures for promotion of digital and cashless economy in the country," a statement from the Centre said. 

Here are the incentives: 

1) A 0.75% discount on the sale price of petrol and diesel to customers. 

The government said fuel worth Rs 1,800 crore is sold per day in the country, out of which nearly 20% was being paid through digital mediums. After demonetization, this went up to 40%, and cash transaction of Rs 360 crore shifted to cashless transaction methods, the statement said. 

"The incentive scheme has the potential of shifting at least 30% more customer to digital means which will further reduce the cash requirement of nearly Rs 2 lakh crore per year at the petrol pumps," it said. 

2) Expand digital payment infrastructure in rural areas

Centre through NABARD will extend financial support to eligibal 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.

3) Rupay Kisan Cards

The Central Government through NABARD will also support Rural Regional Banks and Cooperative Banks to issue “Rupay Kisan Cards” to 4.32 crore Kisan Credit Card holders to enable them to make digital transactions at POS machines/Micro ATMs/ATMs.

4) Railway sops

The Railways will offer up to 0.5% off on monthly and seasonal tickets from January 1, 2017, for paying through digital methods. This may help reducing the cash requirement by Rs 1,000 crore per year in the future. 

5) Free railway accidental insurance cover of upto Rs 10 lakh for free if you book your train tickets online. 

58% of the near 14 lakh tickets bought, are paid for online. It is likely that 20% more may shift to digital payments soon. This will cover nearly 11 lakh passengers per day under the accidental insurance scheme. 

6) A 5% discount on catering, accommodation, retiring rooms, etc, offered by railways. 

7) Discount or credit of up to 10% on the premium of general insurance policies and 8% on new life policies of LIC if payments are made through digital means. 

8) Transaction fee/ MDR charges associated wtih payment through digital means will not be passed on to the customers, and all such expenses will be borne by the Central government departments and central public sector undertakings. State governments have also been advised to follow suit. 

9) Monthly rental of PoS terminals/ micro ATMs/ mobile PoS shouldn't be more than Rs 100 to incentivise small merchants' move to digital modes of payments. 

10) No service tax on digital transaction charges/ MDR for transactions up to Rs 2,000 per transaction.

11) 10% discount if you use Radio Frequency Identification (RFID) cards/ fast tags to pay toll on National Highways in 2016-17.