The consumer trade isn't too far behind either, with mid-sized retailers reporting a surge in digital transactions up to Rs 2 lakh. According to the present norms, customers will not have to furnish any KYC documents for purchases of gold up Rs 2 lakh.
Surendra Mehta, national secretary, India Bullion & Jewellers' Association (IBJA), said that cash dealings are virtually nonexistent in the B2B space. "All B2B transactions are happening only through Net banking. What is striking is that mid-sized jewellers are encouraging digital transactions. Almost 40% of their business now comes through the digital platform."
Aditya Pethe, director, WHP Jewellers, said that digital transactions are increasing. "The government should look into the cost of transactions in the case of credit cards. Merchants have to bear the high cost of transactions. Margins in the jewellery business are thin, with the highest being 10%. And in bullion business, margins are as low as 2.5%. If the merchant has to bear the cost of transaction, then his margins come under pressure."
In the case of debit cards, RBI has already come out with differentiated merchant discount rates (MDR) for debit card transactions, prescribing separate caps for small and large traders.
MDR is the rate charged to a merchant by a bank for providing debit and credit card services.
According to the latest notification, MDR charges for small merchants with an annual turnover of up to Rs 20 lakh have been fixed at 0.40%, with a cap of Rs 200 per transaction by debit cards through Point of Sale (PoS) machines or online transactions. For accepting payments via QR (quick response) code-based transactions, the charge will be 0.30%, subject to a cap of Rs 200 per transaction.
In case the annual turnover of a merchant exceeds Rs 20 lakh, the MDR charges would be 0.90%, with a cap of Rs 1,000 per transaction. If a transaction is through QR code, the charges will be 0.80% with a similar cap.
Meanwhile, there are talks in the gold trade that the import duty on the metal will be reduced from 10% to 4% and that there will be an increase in GST.
Nitin Khandelwal, chairman, All India Gem & Jewellery Trade Federation (GJF) said the reduction in customs duty on gold and bullion is a welcome initiative, but it should be delinked from tweaking the existing GST rates for the domestic business.
The present 3% GST is also challenging for the industry to absorb.