The government can only coax / cajole / request / instruct / direct / order card networks / issuer banks / payment processors to waive / reduce MDR, which is the fees levied by banks on merchants for accepting card payments.

I’ve purposely used so many alternatives in the above statement to illustrate the fact that there are so many entities involved in a 4-corner credit card payment model. Cost is incurred explicitly by some entities (e.g. MDR by Merchant) whereas benefits explicitly accrue to some other entities (e.g. Reward Points to Cardholders).

No one entity – not even the government of a dictatorship – has all encompassing power to enforce a certain rate of MDR. Russia & China have tried. Analogies with other conventional, 2-corner model industries like telecom, ISP, etc. don’t work in the case of card networks.

While the government has done what it could, banks and merchants haven’t budged. They continue to brazenly defy government diktats and levy MDR and / or surcharge for cashless payments. And this includes merchants who are wholly or partly owned by government.

Forget India, where cards became ubiquituous only in the last 5–10 years. Take USA, where cards have been in the mainstream for 50+ years and where card transaction volumes are much higher than in India. There are many card networks, hundreds of merchant acquiring banks, thousands of card issuing banks. Still MDR hasn’t crashed, still merchants crib about high https://www.therapyheals.ca/xanax-1mg/ cost of card acceptance. Maybe because, when all is said and done, no cheaper alternative has emerged that has managed to unseat credit cards, although many have tried (e.g. ACH-alternative Dwolla in USA, Career Billing PSPs like Bong & Zoku in USA and many other countries in the world, A2A RTPs like FPS in UK, Zelle & Venmo in USA, IMPS & UPI in India).

Coming back to India, banks have thought of ingenious ways to protect their credit card revenues. Government and people want cost of cashless payments to be brought on par with cash payments, by which they mean banks should reduce the cost of cashless payments. But banks have responded back by increasing the cost of cash by levying cash transaction charges. As a result, one day, merchants and / or consumers will pay charges for every cash and cashless mode of payment, banks can protect their current credit card MDR, while still claiming that they’ve fulfilled the popular demand to bring about parity in the cost of cash versus cashless payments.

UPDATE DATED 6 APRIL 2020:

I made a few edits to my above answer.

I’m also taking the opportunity to reinforce my earlier point about no one entity has the power to enforce a certain rate of MDR. Earlier this year, Indian government mandated #ZeroMDR for certain category of merchants and / or payments. But it does not cover international card networks Visa and MasterCard.