Visa and MasterCard are likely the great beneficiaries of the recent move by the Indian government to remove high denomination bills from circulation in their effort to discourage cash transaction that accounts for more than 90% in all transactions conducted in India. Both companies have indeed been pushing the government of India to spearhead this move in a matter seen as mutual benefit as the two master companies will benefit as paper currency in the electronic shift while the government optimize in tax collection. As the event unveils, Visa and MasterCard are bound to increase their sales several folds as attributed by re-known analysts.
Electronic money transfer will not only enable most transactions in India to be booked but will also facilitate for a smooth tracking of business activities and thereafter be able to collect taxes effectively. The recent ban of the 500 and 1000 rupees notes with effect from November 9, 2016 saw a massive deposited of money across all Indian banks that is believed to account to up to 86% of the total currency in circulation. Considering that only an estimate if slightly over 1% of legible Indians currently pay taxes up to mark, the use of Visa and MasterCard will compliment with the government efforts to discourage the use of cash transactions that have continued to see the black marker money keep on surging outside there; tax free. The new regime has therefore taken these broad steps in order to curb tax evasion as well as recovering illegal income and later stashing it oversees.
According to report released by Visa in October, plans to lay down the structural framework of implementing digital payment are on their final stages and are projected to save the government up to $70 billion over a period of 10 years out of effective collection of taxes. Bearing this, this is an important move especially to the government from which it will be able to predict on net income, reduce evasion of taxes through black money by many rich businesses that evade tax and thus do not support economy growth. Besides, it will enable for planning in advance as well as create new employment opportunities. The move towards making India a leading in global cashless and digital economy movement together with that of India prime minister’s move to ban 500 and 1000 rupees note has gained tremendous support by MasterCard, Indian government and banks same as Banga, a native in India, who has been advocating for the sane since assuming the CEO MasterCard in 2010.
Notably, transformation of the more than 80% cash transactions into electronic and banks transactions comes with numerous opportunities. The new developments are expected to stir up interests to Visa and purchase which are MasterCard dealers based in the New York as possible merchants and issuers of the Visas and MasterCard in India.