In another push to the digital payments landscape in India, Finance Minister Niramala Sitharaman announced removal of Merchant Discount Rates (MDR) on digital transaction made at big establishments having an annual turnover of more than Rs 50 crore.
In addition to this, to discourage making business payments in cash, the Finance Minister announced a tax deducted at source or TDS of two percent for businesses proposed on cash withdrawals exceeding Rs one crore annually from their bank account.
While announcing this, the FM also applauded the role of India’s digital payments infrastructure to push a cashless economy. She added,
“BHIM, UPI–QR, AePS and other digital modes can be used to push less cash economy.”
The digital payments market In India is set to grow to $1 trillion by 2023 led by growth in mobile payments, which are slated to rise from $10 billion in 2017-18 to $190 billion by 2023, according to NITI Aayog’s report, Digital Payment. This was based on a study by Credit Suisse.
The growth is credited to high volume and value of digital transactions that were carried out after demonetisation. Further, bringing the focus on micro, small and medium enterprises (MSMEs), the Finance Minister, as part of her Budget speech, also announced that a payment platform for the MSMEs will be set up.
According to a report by Worldline India, the total volume of UPI transactions this quarter was 2.1 billion, a 328 percent rise from the first quarter last year. In terms of value, transactions increased by 495 percent, clocking Rs 3.5 trillion.
Moreover, the number of transactions on mobile wallets increased by 24.42 percent, recording 1.12 billion in the first quarter this year, while the total value of transactions was Rs 461 billion.
In terms of states with highest transactions, Maharashtra, Karnataka, and Tamil Nadu topped the list, while Bengaluru, Mumbai, and Chennai were the three leading cities.
(Edited by Megha Reddy)
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Tarush is driven towards delivering unbiased and accurate reportage while engaging with as many mediums as possible to narrate a fresh perspective. Working for the past few years in the digital space with YourStory, he has covered the Indian technology ecosystem extensively, focusing on new age Fintech companies, while building strong connects within the industry.