Budget 2019: You Don’t Have to Pay Extra for Mobile & Card Payment

India’s acceptance for digital payment saw a big surge after demonetisation led to cash crisis in 2016.

While the budget 2019 didn’t offer encouragement for the upper middle class segment, it did promise better days with respect to paying for goods and services digitally. People have already been given big incentives (in the form of cashbacks) to pay via mobile apps, online banking or card payment.

But now the government is hoping to convert more cash payers into digital savvy consumers.

For this, the Finance Minister has announced that more companies, offering services to consumers will have to compulsorily give them the option to pay via various digital payment platforms.

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This mean, all companies valued over Rs 50 crore will support digital payments for consumers. This might not be difficult for existing players in the market, who’ve already warmed up to users paying cashless. And for the consumers, there’s more good news in this regard.

I, therefore, propose that the business establishments with annual turnover more than 50 crore shall offer such low cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants

Nirmala Sitharaman, Finance Minister

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You won’t be charged merchant discount rate (MDR) by the seller, for making payments to get tickets or pay bills using credit card. This is usually charged by players like Paytm, who earlier on Friday reportedly stated that MDR charges will be passed on to the consumer but that’s unlikely to go through now.

This is what FIS has to say about the changes made keeping digital payments in mind.

We believe BHIM, UPI, Aadhaar Pay, NEFT, RTGS will be more used by the businesses making India less cash economy, as the government has announced that commercial establishments with annual turnover of Rs 50 crore will have to use these modes of payments while no charges or merchant discount rates will be imposed on customers or merchants. This is a very reassuring move to stimulate digital payments in the country, particularly in Tier II and II cities.

Ramaswamy Venkatachalam, Managing Director - Banking and Payments, FIS

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MDR is charged by banks and card companies on the seller but now, having been asked by the Finance Ministry to bear its expenses, rather than pushing to the consumers,they might have a lot to complain.

India’s apparent push towards digital payment revolves heavily around using mobile payment or Unified Payment Interface (UPI) which has resulted in low growth in penetration of debit/credit card in the country. The latest changes made is unlikely to change that narrative.