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“This move may set back the journey towards a cashless society. Many small vendors and marginal merchants are reluctant to enter the formal sector because they fear additional compliance requirements and administrative hassles,” said a market insider, requesting anonymity.

The insider added that making BINs mandatory for merchant accounts could discourage some businesses from using digital payment platforms altogether.

There are currently nearly 10 lakh merchant account holders across the country, according to industry sources.

The finance ministry official said the government may also make BIN registration mandatory in several other areas, including opening and operating current or short-term deposit accounts with banks and non-bank financial institutions, obtaining loans, renewing trade licences, securing memberships in trade bodies, obtaining electricity and gas connections, and registering vehicles in the name of a business.

Officials familiar with the proposal said the requirement is intended to bring more businesses into the formal economy and improve the government’s ability to track commercial activities that currently take place outside the tax system.