Soon, You Won't Have to Pay Service Charge, Surcharge on Card and Online Transactions
Currently, many vendors, such as IRCTC and Bookmyshow.com, levy service charge or convenience fee on card and digital payments
Service charge, user charge and convenience fee paid by gateways and vendors on online or card payments will be waived once steps approved by the Cabinet on Wednesday come into effect.
Also, above a threshold, one has to make payment online or through cards. The move would discourage cash payment and help tax authorities get leads on evasion. The Cabinet approved various steps in this regard to be taken in a year to two years to boost these payments.
Service charge is currently levied by payment gateways and paid to the government. The vendor using a payment gateway also pays a convenience charge. On credit cards, it is 1-2.5 per cent. The move will help the government in carrying out its financial inclusion programmes digitally. “It will help reduce transaction cost and encourage electronic mode of payment, facilitating the financial inclusion agenda of the government,” said Kalpesh Mehta, partner, Deloitte Haskins & Sells.
The official statement explained the promotion of payments through cards and digital means will be instrumental in reducing tax avoidance, migration of government payments and collections to a cashless mode. To give a perspective, 569 million transactions were made till December of the current financial year, with payments worth Rs 67.75 lakh crore.
Also, above a threshold, one has to make payment online or through cards. The move would discourage cash payment and help tax authorities get leads on evasion. The Cabinet approved various steps in this regard to be taken in a year to two years to boost these payments.
Service charge is currently levied by payment gateways and paid to the government. The vendor using a payment gateway also pays a convenience charge. On credit cards, it is 1-2.5 per cent. The move will help the government in carrying out its financial inclusion programmes digitally. “It will help reduce transaction cost and encourage electronic mode of payment, facilitating the financial inclusion agenda of the government,” said Kalpesh Mehta, partner, Deloitte Haskins & Sells.
The official statement explained the promotion of payments through cards and digital means will be instrumental in reducing tax avoidance, migration of government payments and collections to a cashless mode. To give a perspective, 569 million transactions were made till December of the current financial year, with payments worth Rs 67.75 lakh crore.
The infrastructure of card and digital payments is growing but remains modest in comparison to cash payments.
For card and digital payments to increase, these should be easy to use, readily available and accepted, should not impose any undue financial burden on the merchant and user, and should offer an appropriate level of security.
The evidence indicates penetration and success of card and digital payment products and services is concentrated to a large extent in tier-l and tier-ll locations, mostly to citizens with access to the formal banking channels.
Introduction of the Payment and Settlement Systems Act, 2007,s resulted in deeper acceptance and penetration of modern card and digital payment systems. An Aadhaar Enabled Payment Systems has been brought to leverage upon biometric verification and a domestic card network, RuPay.
The Reserve Bank of India recently approved licences for setting up of payments banks, with the objective of greater financial inclusion to migrant labour, low income households, small businesses and other unorganised sector entities. This would help card and online payment to spread among the poorer strata.
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