Service Charge On Card Payments Cleared

In a ground-breaking announcement, Prime Minister Narendra Modi on Wednesday approved withdrawal of surcharge, service charge and convenience fee on card and digital payments made online or otherwise for public services.

In what is seen as a step towards becoming a cashless economy, the Modi-led government also approved mandating payments beyond a prescribed threshold only through a card or digital mode. This move is believed by analysts as a process of curbing black money too. "The move aims at reducing cash transactions," the government said in a press release. The measures, which are speculated to get implemented within a year, will discourage cash payments beyond a threshold and promote digital payments by making such methods the most convenient and secure. "Several short term (to be implemented within one year) and medium term measures (to be implemented within two years) have been approved for implementation by the government ministries/departments/organizations," the government said.

India had over 21.4 million credit cards and more than 570 million debit cards in May 2015, compared to close to 20 million credit cards and 441 million debit cards in October 2014.

Although the payment system initiatives taken in the form of Electronic Clearing Service Scheme, National Electronic Funds Transfer, Real Time Gross Settlement Scheme have been impressive, the benefits of modern card and digital payment systems are yet to reach all sections of the society and be accepted across the country.

To facilitate all this, the government will introduce appropriate digital payment options across the organization.