'Incentivising Cashless Payments to Boost Digital, Fintech Companies'

New Delhi: The industry on Thursday gave a thumbs up to the government's move to incentivise cashless payments saying the benefits passed on to consumers will give a booster of growth to fintech or digital payment companies.

Industry experts said the announcements will bring in a "paradigm shift" in the way users look at digital instruments.

"This is the first major effort to directly incentivise the customer for using digital instruments as opposed to the practice of disincentivising them," Internet and Mobile Association of India President Subho Ray said.

He added that these announcements will prompt people to make the extra effort to keep aside cash and use digital modes for transactions.

Petrol, railway tickets and insurance policies of PSU companies will cost less now if bought through debit/credit cards or other digital modes, the government today said while announcing a slew of measures to incentivise cashless payments.

The Centre has also waived service tax for payments up to Rs 2,000 made through cards and has decided to do away with transaction fee for payment to central government departments and PSUs.

The move follows a month after government demonetised Rs 500 and Rs 1000 notes to check black money, leading to a severe cash crunch in the system.

Against this backdrop, it is also aggressively promoting digital mode of payments to ensure that the economy becomes less dependent on cash transactions.

"This change indicates the strong resolve of the government to move the economy away from cash transactions and hopefully more such measures are planned to encourage digital payments," M S Mani, Senior Director at Deloitte Haskins & Sells LLP, said.

Pramod Saxena, Chairman and Managing Director of Oxigen Services added that digital payments will not only accelerate consumption with efficiency but also reduce idle cash in hand and improve savings for consumers.

"More such incentive announcements should be implemented in other payments such as electricity or mobile bills, long distance railway tickets, etc. Benefits passed on to consumers will give a booster of growth to fintech or digital payment companies," Payment Council of India Chairman Naveen Surya said.