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Published in Mint on Dec 13 2016.

On 8 December, the government announced a slew of incentives on digital transactions. Such transactions include those done with credit cards, debit cards, e-wallet, mobile apps and Net banking. The government said that in the aftermath of the cancellation of the legal tender character of old Rs500 and Rs1,000 notes, there has been a surge in digital transactions through use of credit and debit cards, apps and e-wallets. To further accelerate this process, the Centre has decided on a package of incentives and measures to promote a cashless economy. Here’s a look at what these incentives mean for you.

Purchase of petrol and diesel: The government is offering a discount of 0.75% to consumers if they make a digital payment when buying petrol or diesel. “Nearly 4.5 crore (45 million) customers who buy petrol or diesel from petrol pumps each day can take benefit of this incentive scheme. It is estimated that petrol and diesel worth Rs1,800 crore is sold per day… of which nearly 20% was being paid through digital means,” stated a Ministry of Finance note. It added that cash transactions worth Rs360 crore per day have now shifted to cashless transaction methods, and that in November, 40% transactions were through digital means. According to the note, “The incentive scheme has the potential of shifting at least 30% more customers to digital means, which will further reduce the cash requirement of nearly Rs2 lakh crore per year at the petrol pumps.”
What it means for you— If you are in Mumbai and drive a diesel car for 15 days a month for 30-35 km per day that gives an average of 18-19 km per litre, your diesel bill would currently be Rs6,000. If you get a 0.75% discount on this, you save Rs45.
Some banks have also waived fuel surcharge by giving 2.5% as cashback. And if you get another 5% discount on certain cards, you save more. “There are co-branded credit cards for fuel purchases that offer cashback. Hence, your overall discount could be higher,” said Anurag Jain, co-founder, GirnarSoft, which runs CarDekho, Gaadi, and ZigWheels.
Purchase of railway tickets: If you buy railway tickets through its suburban railway network, you will get a discount up to 0.5% for monthly or seasonal tickets from 1 January 2017, if payment is made through digital means. The Finance Ministry note stated: “Nearly 80 lakh (8 million) passengers use seasonal or monthly ticket on suburban railways, largely in cash, spending worth nearly Rs2,000 crore per year. As more and more passengers will shift to digital means, the cash requirement may get reduced by Rs1,000 crore per year in near future.”
Apart from this, all railway passengers who buy online tickets for long distance travel will get free accident cover of up to Rs10 lakh. “Nearly 14 lakh (1.4 million) railway passengers are buying tickets everyday out of which 58% tickets are bought online…. It is expected that another 20% passengers may shift to digital payment methods…. Hence, nearly 11 lakh (1.1 million) passengers per day will be covered under the accident insurance scheme,” the ministry said in the note. For paid services such as catering, accommodation and retiring rooms offered by the railways through its affiliated entities and corporations, there will be a discount of 5% if payment is through digital means.
What it means for you—According to Mumbai Suburban District’s website suburban railway includes Bandra to Dahisar, Kurla to Mulund and up to Trombay creek. As of now, say a first-class monthly ticket costs you Rs665. From 1 January, if you pay digitally, with 0.5% discount you will have to pay Rs661.68.
However, do remember that some banks may charge you a convenience fee or service charge, which could get added to your discounted bill.
In case of accident insurance, currently the railways charge you 0.92 paise for a Rs10 lakh cover. This charge will be waived from 1 January.
Purchase of insurance: Public sector insurance companies will give an incentive by way of discount or credit, up to 10% of the premium in general insurance policies and 8% in new life policies of Life Insurance Corporation of India (LIC) sold through their websites, if payment is made through digital means.
What it means for you—Since the note states “up to 10%” discount for general insurance, the actual discount may be lesser. “We will still have to see the final deduction amount that the insurance companies may offer. Even if it is less than 8-10%, it is still an advantage. Besides the financial benefit, it will also help in record keeping and renewals. It will also help in claims since it becomes easier to track. And it will put competitive pressure on private companies in terms of pricing. Hence, consumers are set to benefit,” said Kapil Mehta, co-founder, According to Mehta, a bulk of the premium payments are made by cheque or cash as of now. Only 15-20% premium payments happen digitally, he said.
Paying toll: If you pay toll on national highways using radio-frequency identification (RFID) card or fast tags, a discount of 10% will be available to users in the financial year 2016-17.
What it means for you—A fast tag is a reloadable tag, which enables automatic deduction of toll charges and lets you pass through without stopping for the cash transaction. The tag is linked to a prepaid account from which the toll amount is deducted. The tag is affixed on the vehicle’s windscreen. So, with the newly introduced discount, if you recharge your fast tag using your card, wallet or Net banking for Rs100, you will have to pay Rs90.