The Reserve Bank of India recently announced that it will reimburse banks the merchant discount rate (MDR) charges in debit card transactions for tax and non-tax dues to the government with effect from January 1.
Announcing the recent update, RBI’s official communication said, “The government has decided to absorb the Merchant Discount Rate (MDR) charges in respect of debit card transactions while making payments to GoI.”
It further advised agency banks to forward their claims for reimbursement along with auditor’s certificate on a quarterly basis to RBI’s central account section in Nagpur, reported the Financial Express.
“The claims may be signed by the officer-in-charge of the government banking division of the bank, and should also certify that MDR charges for transaction amounts up to Rs one lakh have not been collected from the payer. The first such claim may be made by April 30, 2017 for the quarter ending March 31, 2017,” the RBI added.
According to RBI data, the total number of debit card transactions at Point of Sale (PoS) terminals in December 2016 stood at 321.54 million of Rs 43,874 crore.
The value of PoS transactions fell 25% in January from their peak in December, mostly due to the gradual easing of limits on cash withdrawals, starting January, representative data from the RBI showed.
In a bid to push debit card transactions, the RBI on December 16 had capped the MDR on transactions of up to Rs 1,000 at 0.25% and for those between Rs 1,000 and Rs 2,000 at 0.5%.