In a bid to promote digital payments, Reserve Bank of India (RBI) has announced differentiated merchant discount rates (MDR) on debit as well as credit card transactions, stipulating separate caps for small and large traders.
The MDR charges offered to small merchants with an annual turnover of up to Rs 20 lakh is fixed at 0.40 per cent with a capping of Rs 200 per transaction using debit cards through Point of Sale (PoS) machines or online transactions. For accepting payments via QR (quick response) code based transactions, the charge will be 0.30 per cent subject to a cap of Rs 200 per transaction.
If the annual turnover of the merchant exceeds Rs 20 lakh, the 0.90 per cent MDR charges would be offered with a capping of Rs 1,000 per transaction. If the transaction is performed using the QR code, the charges will be of 0.80 per cent with a cap-subject to a cap of Rs 1,000 per transaction.
These charges would be applicable from January 1. The central bank has directed that banks to be primarily responsible ensure the MDR levied on the merchant does not exceed the prescribed cap.
“Banks are also advised to ensure that merchants on-boarded by them do not pass on MDR charges to customers while accepting payments through debit cards,” the RBI said.
The MDR is a rate levied on the merchants by the bank for ensuring debit and card services. The RBI said the rationalisation of charges is being done with a motive to achieve the dual objective of promoting the debit card acceptance within wider set of merchants, especially among small traders, and ensuring sustainability of the business for the entities involved.