"We need to reduce the dependence on cash throughout the city, for which we have launched a campaign," IT minister Nara Lokesh told reporters.
He said infrastructure supporting cashless payments is being created across the port city, starting with the state- run buses, to accept digital modes of payments while citizens avail the services.
A pilot project, that entails citizens doing "tap and pay" through near-field communications cards on the buses, has already started, said T R Ramachandran, India country manager for Visa, that is anchoring the project.
Visa has tied up with a slew of lenders to ensure that such cards are issued to the citizens of the town, he added.
Apart from the tap and go on buses, the project relies heavily on the Bharat QR code wherein users will be able to pay something like electricity bills by scanning codes on their smartphones, Mr Lokesh said.
The facility also allows almost all other payments such as for cooking gas, fuel purchase, paying utilities bills like telephones, and general merchant payments among others, he added.
The minister said amendments will be moved to the Shops and Establishments Act in the state to make it mandatory for merchants to put up the codes at their shops to accept digital payments.
Ramachandran said the project is targeting to touch 90 per cent of the city's population, or 18 lakh people, within the first year.
As a pull, incentives like cash-backs on bill payments are also included in the plan, he added.
Based on the experiences with this project, Visa is looking to launch a similar project in seven-eight districts in the state and is in talks with three more states to introduce similar schemes over the next one year.
It can be noted that till now, focused efforts on reducing cash usage have been limited to villages and this may be one of the largest such efforts.