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RBI cuts debit card transaction charges

By Chennabasaveshwar
|

The Reserve Bank of India (RBI) has rationalized the framework for Merchant Discount Rate (MDR) applicable on debit card transactions based on the category of merchants. The RBI stated that the revised MDR aims at achieving the twin objectives of increased usage of debit cards and ensuring sustainability of the business for the entities involved.

RBI cuts debit card transaction charges

Based on consultations with stakeholders on the "Draft Circular - Rationalisation of Merchant Discount Rate (MDR) for Debit Card Transactions", it has been decided to rationalise the MDR for debit cards based on the following criteria.

A. Categorisation of merchants on the basis of turnover.

B. Adoption of a differentiated MDR for QR-code based transactions.

C. Specifying a ceiling on the maximum permissible MDR for both 'card present' and 'card not present' transactions.

As per the latest notification, MDR charges for small merchants with an annual turnover of up to Rs 20 lakh has been fixed at 0.40 percent with a cap of Rs 200 per transaction by debit cards through Point of Sale (PoS) machines or online transactions. The new rates will come into effect from January 1.

( https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11183&Mode=0)

RBI wants to achieve twin objectives of promoting debit card acceptance by a wider set of merchants, especially small merchants, and ensuring sustainability of the business for the entities involved.

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