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

Accuracy more important than speed in news: Anurag Thakur

Presenting authentic information is the prime responsibility of media and that facts should be properly checked before they are put in the public domain, union minister of information and broadcasting Anurag Thakur has said. “While speed with which the information is transmitted is imp

FM concludes pre-budget consultations

Union minister for finance and corporate affairs Nirmala Sitharaman has concluded the pre-budget consultation meetings for Budget 2023-24 that were held from November 21 to 28 in the virtual mode. More than 110 invitees representing seven stakeholder groups participated in eight meetings sch

Coal production rises by 18% to 448 MT

The total coal production in the country stands at 448 million tonnes (MT) for the month of October 2022 which is 18% higher than the production of the corresponding period of last year. The growth of coal production from Coal India Ltd (CIL) is also more than 17%. The ministry of coal said

How to execute large-scale social impact projects

The number of social innovators and entrepreneurs has considerably increased recently in India. The idea of social entrepreneurship, which aspires to provide novel solutions for the world`s most critical social issues, is now receiving more attention. Challenges like overworked healthcare,

Plastic is no longer a waste management issue

Plastic is arguably the most ubiquitous material of our times. In this Age of Plastic, it might seem its use can’t go up any further – and yet it keeps going. Between 2000 and 2015, global production of plastic increased by a whopping 79%. The total mass of plastics on our planet is now twice t

Celebrating the Ganit of Protein!

“Why is the child growing?” is the question that bothers a lot many in the administration. The answer, to be honest, is to be discovered via science, and less via what we call ‘effective administration’. Eventually, it will be the latter that will enforce the former on the field, bu

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now


Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter