The government has waived off import duties on POS machines originating from China in an effort to bring down the prices of swiping machines in India, which are on great demand ever since the government announced to demonetize higher order currencies and asked people to go cashless.
Finance Minister Arun Jaitley on Thursday said the government and the Reserve Bank are taking measures to bring down the digital transaction cost with an aim to move towards a less-cash economy.
Chairing the 5th Meeting of the Consultative Committee attached to his ministry, Jaitley said digital transactions are a parallel mechanism, not a substitute, for cash transactions and "cashless economy is actually a less cash economy as no economy can be fully cashless".
Regarding the availability of point-of-sale (POS) or card swiping machines, he noted POS machines are manufactured by two companies in China and the government has waived duties on them so that these machines become cheaper and reach the shopkeepers easily.
Banks may run up against a shortage of POS machines as the process of procuring them from China could take weeks, according to media reports. BloombergQuint reportedearlier that Verifone and Ingenico control nearly 80 percent of the POS market.
Jaitley further said the government and the RBI have taken various steps to bring down the cost of digital transactions and specifically mentioned about MDR charges, which are charges that merchants pay on each card transaction to banks. These charges and the expensive POS machines have been big reasons behind the low adoption of POS machines by merchants in India.