India plans to lower costs for e-payments, spur cashless economy

New Delhi

INDIA has unveiled plans to cut transaction costs for electronic payments, to spur retailers and consumers to use less cash, as part of Prime Minister Narendra Modi's drive to pull more people into the formal economy and boost public revenue.

India is among the most cash-intensive economies in the world, with a cash-to-GDP (gross domestic product) ratio of 12 per cent, almost four times that of markets such as Brazil, Mexico and South Africa, global payments company MasterCard estimates. Many small Indian businesses and consumers now prefer cash, to avoid high transaction costs of up to 3 per cent on electronic payments, as well as to escape sales tax.