The Indian Government has announced plans to subsidise digital payments, waiving tax on low-value online transactions and cutting 10% off insurance policies, rail tickets and highway toll fees made via the Internet.
The move comes as the country continues to bear the brunt of a cash shortage after the Government's overnight ruling last month to remove Rs500 and Rs1000 banknotes from circulation. The action has led to huge queues at banks and cash machines as consumers seek to exchange the worthless notes, which comprised 86% of the country’s total currency.
Alongside the incentives for online payments, the Government is also stipulating a 0.75% discount on card-based payments at petrol stations - a move which is expected to take two trillion rupees in physical cash payments annually out of the equation.
The initiative will offer a further boost to the country's competitive mobile payments market, which has experienced surging transactions in the 30 days since demonetisation. Paytm, for instance, has reported a doubling in mobile wallet transactions over the past month.
The Indian experience should provide a few pointers to Venezuala's Government, which has just announced it will replace the country's highest-denomination banknotes with coins within 72 hours. The move, aimed at curbing use of the physical notes by local crime outfits, comes as the country experiences crippling levels of inflation, reducing the value of 100-bolivar notes to about two cents.