×
E-PAPER ▾

E-paper

Business

RBI rationalises charges on debit card transactions

| | Mumbai

In order to promote digital payments, the Reserve Bank on Wednesday came out with differentiated merchant discount rates (MDR) for debit card transactions, prescribing separate caps for small and large traders.

MDR is the rate charged to a merchant by a bank for providing debit and credit card services. 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 per cent with a cap of Rs 200 per transaction by 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.

In case the annual turnover of a merchant is over Rs 20 lakh, the MDR charges would be 0.90 per cent with a cap of Rs 1,000 per transaction.

If transaction is through QR code, the charges will be 0.80 per cent with a similar cap.

These directions will come into effect from January 1, RBI said, adding it would be the duty of the banks to ensure the MDR levied on the merchant does not exceed the prescribed cap.

RBI said rationalisation of the charges is being undertaken with a view to achieve the twin objectives of promoting debit card acceptance by a wider set of merchants, especially small traders, and ensuring sustainability of the business for the entities involved.

Following demonetisation, the RBI had in December last year capped the MDR charges at 0.25 per cent for transactions up to Rs 1,000.

For transactions above Rs 1,000 and up to Rs 2,000, it was capped at 0.5 per cent of the transaction value.

Before that, the MDR was capped 0.75 per cent for transaction up to Rs 2,000 and not exceeding 1 per cent for payments above Rs 2,000.

Commenting on RBI's move, Ashwani Kumar, Chairman and Managing Director of Dena Bank, said introduction of differentiated MDR and a cap on the absolute amount is expected to increase acceptance of debit card usage and “will also bring down the cost of transactions for small merchants”.                      

 
 
 
 
 

TOP STORIES

Sunday Edition

View All

N Korea blames US for tensions in rare UN talks

10 Dec 2017 | AFP | Seoul

North Korea blamed US "nuclear blackmail" for soaring tensions over its weapons programme in rare meetings with a senior UN official, but agreed to regular communication with the organisation, state media said today. Jeffrey Feltman arrived in Beijing today after wrapping up a five-day visit to Pyongyang aimed at defusing the crisis, just a week after North Korea said it test-fired a new ballistic missile capable of reaching the United States...

Read More

STATE EDITIONS

View All

Cong to hold yatra against Govt policy

13 Dec 2017 | PNS | Ranchi

The Congress will organise a yatra covering all the 11 districts where the party feels that the employment rights of the locals have been compromised with. The protest is also against the said promise reportedly made by Chief Minister Raghubar Das to amend the decision allowing outsiders into Government jobs in certain part of the State...

Read More

Page generated in 0.5289 seconds.