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Cabinet Ends Surcharge, Service Charge on Digital Payments

New Delhi: The cabinet chaired by Prime Minister Narendra Modi has approved the measures to promote electronic payments through plastic money and digital means.

These include the withdrawal of surcharge, service charge and convenience fee on card or digital payments presently imposed by various government organizations and departments.

The move discourages cash transactions by providing access to financial payment services to citizens to pay through digital means and shifting payment ecosystem from cash to non-cash or less cash payments.

Other measures include rationalization of Merchant Discount Rate (MDR) on card transactions and a differentiated MDR framework for some key segments. Moreover, the cabinet approved introduction of formula-linked acceptance infrastructure by stakeholders of certain card products, promotion of mobile banking and rationalization of telecom service charges for digital financial transactions.

The measures also include creation of necessary assurance mechanisms for fast resolution of fake transactions and reviewing the payments ecosystem in the country.

Furthermore, several short-term (to be implemented within 1 year) and medium-term measures (2 years) for implementation by the government departments, organizations and ministries were approved.