RBI looks at rationalising debit card transaction rate for merchants

Recent developments have given a fillip to electronic transactions including card payments even at smaller merchant establishments

GN Bureau | February 17, 2017


#Reserve Bank of India   #RBI   #Debit Cards   #Banking  


The Reserve Bank of India (RBI) has sought public feedback the draft circular on rationalisation of Merchant Discount Rate (MDR) for debit card transactions.

MDR is the rate charged to a merchant by a bank for providing debit and credit card services. The rate is determined based on factors such as volume, average ticket price, risk and industry.

Read: Two counts of failure

An RBI circular said that recent developments have given a fillip to electronic transactions including card payments even at smaller merchant establishments. Keeping this in mind, for encouraging a wider segment of merchants to accept card payments, consultations were held with stakeholders for rationalising the MDR structure for debit card transactions.

“This draft circular is the culmination of these discussions and seeks a shift from the present slab-rate MDR based on transaction value to merchant turnover based MDR structure, for which merchants have been suitably categorised. Further, a differential MDR structure for asset light card acceptance infrastructure like QR Code, special merchant categories for government transactions and other transactions involving non-discretionary expenses have also been proposed. Banks are free to set the MDR below the regulatory caps indicated for each category.”

Read: Demonetisation is a major driver that is forcing people towards digital payments: Nasscom president 

In March 2016, a concept paper was published on RBI website that spelt out various options for rationalisation of MDR structure along with strategies to enhance card acceptance infrastructure in the country. Further, on December 16, 2016, special measures pertaining to MDR on debit card transactions were introduced for a three month period from January 01, 2017 to March 31, 2017, wherein it was indicated that the framework for charges on electronic transactions will be reviewed in consultation with the stakeholders as it is imperative to formulate a longer term MDR structure while assessing costs incurred in card acquiring business.

Earlier, in June 2012, a regulatory cap was put in place on MDR for debit card transactions on ad-valorem basis.

Read: RBI’s draft circular - Rationalisation of Merchant Discount Rate (MDR) for debit card transactions
 

Comments

 

Other News

Thackeray orders probe in Nashik Hospital gas leak tragedy

The Maharashtra government has ordered a probe into the tragic incident of oxygen leak at the Zakir Hussain Hospital in Nashik district, in which 24 Covid-19 patients on critical life support have died. Chief Minister, Uddhav Thackeray expressed grief over the tragic incident and announced

"Maharashtra opposition interested in politics, not public welfare”

Refuting any political instability in the state, Jayant Patil, Maharashtra cabinet minister and state president of Nationalist Congress Party (NCP), has said the government is very stable and there are no differences among allies. The senior leader accused the opposition of ‘playing po

In Mumbai, decline seems to have begun

Amid a virulent second wave, as Mumbai scrambles for hospital beds, the civic authorities have said there was no need for panic since 3,685 beds were still available in the city for Covid-19 patients as of Tuesday evening. Also, after a surge there has been a decline with new cases coming down to 7,000-8,0

UP govt hospital goofs up Covid test results

At a time when the country is fighting the virulent second wave of Covid-19 with daily cases upwards of 2,50,000, testing is of critical importance, but government-run labs are not only delaying reports, in one case there was a goof-up and a negative report turned to positive within a day. A

Politicians trade charges as Covid breaks previous records in Maharashtra

A political war erupted between the centre and Maharashtra over supply of essentials including medicines and oxygen as the state struggles to control the raging Covid-19 amidst scarce health infrastructure. Maharashtra has seen a consistent rise in Covid infections and recorded 67,123 new c

Remdesivir procured at high prices to save lives: BMC

Countering the opposition BJP’s allegations of corruption in the procurement of Remdesivir, a critical anti-viral injection often prescribed for Covid-19 patients, the BrihanMumbai municipal corporation (BMC) has clarified that its decision to procure the drug was aimed at saving  lives even if

Masterminds Masterclass with Nikhil Mahadeshwar, Cybersecurity Expert & Co-founder, Skynet Softtech



Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter