Pervasive adoption of digital payment can save the Indian govt Rs 20,000 crore: FreeCharge COO

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With an aim to discourage cash transactions, the Union Cabinet approved withdrawal of surcharge, service charge and convenience fee on card and digital payments. The Cabinet chaired by Prime Minister Narendra Modi also approved mandating payments beyond a prescribed threshold only through a card or digital mode.

“The essential features of the proposals for promotion of payments through cards and digital means include steps for withdrawal of surcharge, service charge and convenience fee on card and digital payments currently imposed by various government departments, organisations…,” according to an official statement.

“The promotion of payments through cards and digital means will be instrumental in reducing tax avoidance, migration of government payments and collections to cashless mode,” it added. The move primarily discourages transactions in cash by providing access to financial payment services to citizens to pay through cards and digital means and shifting payment ecosystem from cash dominated to non-cash or less cash payments, the statement said.

Sharing his views on the announcement, Govind Rajan, Chief Operating Officer, FreeCharge said, “The recent decision by the Government of India to bring digital payments at par with cash is a watershed moment in the creation of a truly digital India. In combination with Aadhaar and Jan Dhan Yojana, this move constitutes the most wide ranging and ambitious program for the digital transformation of the country. India is amongst the most cash intensive cash economies in the world. India’s cash to GDP ratio is 12%, which is 3-4 times that of comparable economies like Brazil and South Africa. The cost of managing this high cash dependence is over Rs 20,000 crore in the formal banking system and much more in the entire economy. With this strong signal, we are on our way to wean the country off its expensive and inefficient addiction to cash. “

Rajan added that along with saving the government a huge amount of money, it will also provide consumers and merchants a more secure and frictionless way of transacting. “We are confident that the government’s continued support for the digitization of payments will further fuel growth and innovation in the sector, with significant long term socio-economic benefits to the Indian economy,” said Rajan.

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