RBI Caps MDR to boost Digital transactions

Mumbai Dec 6: In a move to boost Digital transactions the Reserve Bank of India has decided to cap the Merchant Discount Rate (MDR) and announced the framework to divide into three categories for debit card transactions.

These categories involve merchants on the basis of turnover, adoption of a differentiated MDR for QR-code based transactions and specifying a ceiling on the maximum permissible MDR for both 'card present' and 'card not present' transactions.

RBI in the monetary policy said that "In recent times, debit card transactions at 'Point of Sales' have shown significant growth.With a view to giving further fillip to acceptance of debit card payments for the purchase of goods and services across a wider network of merchants it has been decided to rationalise the framework for Merchant Discount Rate (MDR) applicable on debit card transactions based on the category of merchants."

The central bank has added 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."

According to new guidelines MDR would be charged as follows
# Merchants whose turnover upto Rs 20,lakhs ,POS Machine - not exceeding 0.40%
(MDR cap of Rs 200 per transaction).

# Merchants turnover upto 20,lakhs ,QR Code -not exceeding 0.30% which is cap of Rs 200 per transaction.

# Merchants with turnover Above Rs 20 lakhs ,POS machine- 0.90% ( MDR cap of Rs 1000 per transaction)

# Merchants with Turnover Above Rs 20 lakhs, QR-Code - 0.80% ( MDR cap of Rs 1000 per transaction).

The RBI has also directed the banks to ensure that that merchant on-boarded by them do not pass on MDR charges to customers while accepting payments through debit cards.

These guidelines would be applicable from 1 Jan 2018.