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Payments Council of India (PCI) – Budget expectations

1)       Implementation of the Ratan Watal Committee recommendations:

To review update on Watal committee recommendations for digital Payments in our country and accelerate the implementation of the same. Last budget announcements are yet to be implemented linked to this committee report.

2)       De-duplication of digital and physical processes for KYC:

Over last few years government and financial sector regulators have taken various bold steps and have allowed digital process like Aadhaar eKYC, digital signature etc however various rules make it compulsory to still take physical documents within a year for KYC or even execute various documents in physical as some regulations and legal requirements make it compulsory to keep physical documents. It’s time to show full faith and confidence by both government and regulators to show their 100% confidence in digital process and no additional need to have physical documentation to be obtained additionally in a year.

3)       Parity between digital Payments instrumentals and cash for faster adoption of cashless:

All commerce transactions are allowed in our country upto Rs. 49999/- with no process, KYC or any other formality by merchants or payers. For all digital Payments user transactions are allowed even small value with extensive KYC and other processes. Digital Payments option like wallet should be freely available with minimal process for all transactions below Rs. 50000/- or cash transactions above Rs. 10000/- should require KYC. Also government should consider to provide tax relief to merchants accepting digital payments on overall incremental values especially with annual turnover of Rs 20lac as proposes in RBI MDR guidelines.

4)       Individual tax exemptions linked to financial services investments or cost:

Categories like travel and Rent have benefitted with tax exemptions provided by government. Similarly it’s time to provide for expanding values and category of spends/investment in Life Insurance, Medical Insurance, Mutual Fund with Individual category values to expand the overall user base and to Drive financial inclusion beyond banking. Similar housing sector related benefits to mass middle class and affordable housing category would have multiple benefits.

5)      Creation of Acceptance Development Fund to build acceptance infrastructure in the country:

The year of 2017 has seen a consistent growth of digital payment transaction. The government has done laudable work by empowering citizens of the country to transact digitally by equipping them with bank accounts and payment instruments. However, 30 lakh POS terminals and a few lakh QR codes for a billion plus people says a lot about the scope for building acceptance infrastructure in the country. The upcoming budget must take steps in this direction. One such step would be creation of an acceptance development fund. This is akin to any market development fund set up by new businesses to create awareness and build a repeat-use customer base. On similar lines, acceptance development fund can incentivize merchants, banks, payment processors to enable digital payments at grassroot levels and conduct mass education campaigns to promote awareness and benefits of digital payments.

6)      Incentivize the acquirers to expand the acceptance infrastructure:

The government has taken numerous measures for the adoption of digital payments. Three essential facets have been activated – a large number of cards have been issued to consumers, acceptance channels have increased with higher POS, QR and UPI penetration and now merchants are aligned to accept cashless payments with the introduction of zero MDR on transactions below Rs 2000 on debit cards, QR and UPI. With Budget 2018, Government can provide some incentives to the acquirers so that these entities can continue to make the investments in the business that are essential to provide the underlying support to the initiatives already taken.

7)       Common Procurement and interoperability for Bank technological assistance like  Cash deposit Machines(CDM) and Cash recyclers:

Due to consolidation of banks, technology items like ATM/CDM/Cash recyclers should be done through common procurement like participation of all PSU / Pvt Sector Banks, including IndiaPost Payment Bank and digital infrastructure to be accorded infrastructure status. There should be inter-operability for cash deposit machines/Cash recyclers.

8)      Enhance the allowable tax free value of Employee benefits under the Income Tax Rules:

To enhance the allowable tax-free value of Employee Benefits under the Income Tax Perquisite Rules and to link it to a Consumer Price Index to keep it relevant year after year. This would give a boost to the Digital and Cashless drive and have a multiplier effect on the economy.

9)       Government to take a view on digital currency and cryptocurrency:

Government to take serious views on ‘Legal tender or government backed digital currency’ to usher in digital Bharat with Digital Rupee. Also privately issued digital cryptocurrencies and their trading needs appropriate policies and urgent regulatory framework. Absence of which would result in innocent consumers being cheated and those who are trying to do this as per book would also risk their capital and investment. It’s time government takes a serious view and come out with the appropriate laws. For Crypto currency trading SEBI is well placed to manage the market and risks related to the same and for government backed legal tender currency RBI with support of finance ministry can take the lead.

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