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CHAPTER 8

Making Broader Acceptance a Reality

Creating Enabling Environment and Acceptance Infrastructure

  • Acceptance infrastructure, particularly Point of Sale (PoS) / Mobile PoS terminals as a percentage of the total number of Debit/Credit Cards is very low. Therefore, mandating banks issuing cards to deploy POS terminals in a prescribed ratio could be considered.

  • Similar to ATMs, non-banks could be autorised to install white label POS terminals.

  • Improve broad band connectivity to enable mobile based payments on a wider scale.

  • Provide complete/partial offset for capital expenditure against import of PoS/ Mobile PoS terminals, which will make installing terminals a more affordable endeavour for acquiring banks. This will also help to overcome the capital expenditure challenge to build vital acceptance infrastructure against service tax payable

  • Given that intermediaries are important stakeholders in driving merchant acquisition, the government can encourage a scheme to subsidise PoS terminals directly or indirectly.

  • Extend depreciation benefits, considering the relatively short life of PoS/ Mobile PoS devices for intermediaries and acquirers, as well as for merchants who bear the cost of these devices.

  • Require issuing banks to install PoS devices in proportion to the cards issued. This may potentially lead to a healthy competition amongst merchants and result in greater acceptance/ non- rejection of digital payments.

  • All new PoS acquiring infrastructure should have the capability to accept and facilitate mobile-based payments.

  • Emphasis on building more plastic card acceptance infrastructure for digital payments especially in Tier 2/3 cities with a specific focus on POS/MPOS devices. Also a subsidy or grant could be provided to small merchants for building necessary acceptance infrastructure.

  • Consider a waiver/reduction in import duties for POS Terminals. There should also be a drive towards “Make in India” for POS and other mobile based payment acceptance technologies.

  • Discontinue or Discredit convenience fee/surcharge on customers who prefer to make payments using digital means such as cards or online banking, mobile wallets. This should be done across all categories to encourage consumers towards digital payments.

  • Waiver of KYC norms for small merchants to onboard them to accept digital payments.

  • Disincentivize cash withdrawals at ATM’s whereby a cash withdrawal fee is charged by the bank

  • Double taxation on Service Tax is adversely impacting the business and should be priority-reviewed.

Encouraging Mobile Banking and Payments Channels

Currently, the telecom companies are levying an Unstructured Supplementary Service Data (USSD) charge of Rs. 1.50 per transaction for mobile banking/payments. To enhance adoption of mobile banking/payment, the USSD charges could be examined and rationalized.

Appropriate changes in the regulatory structure, if required, to promote mobile based payment systems.

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