Why Budget 2018 Should Focus On Digital Transactions
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    India is one of the fastest growing economies of the world today. We have seen strong government drive towards financial inclusion, which continues to benefit from unprecedented advancement in digitization and technology in recent years. We have come a long way in the last five years. Today we have over 30 crore Jan Dhan accounts and these are set to increase further. The use of Aadhaar-linked services is increasing credit penetration beyond the metro cities. The demonetization initiative has brought about a steep jump in the volume of digital transactions.

    However, the digital payments ecosystem needs support for increasing its reach and usage. A specific support area would be Point of Sale (POS) machines, which is perhaps the biggest channel today, to compete against cash transactions.

    Currently there are only about 30 lakh POS devices undertaking close to 39 crores of transactions every month. We need to multiply the number of POS devices to achieve the scale that our country needs. However, there has been a gradual decrease in merchant discount rate ( MDRs) in recent times. Some budgetary incentive in this space would go a long way in promoting cashless transactions.

    At the same time, the Unified Payments Interface (UPI) system could emerge as a cheaper and more scalable alternative to POS machines, because of the rising penetration of smartphones and internet connectivity. Budget 2018 can possibly provide the much needed incentives such as cashbacks for both customers and merchants

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