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

BJP-RSS have never had elected presidents to date: Pawan Khera

In a scathing attack on the government, PawanKhera, national spokesperson of the Congress party, has said that the BJP is remote-controlled by RSS, an unregistered organisation that decides who the PM will be and lead the country, yet no question is asked to them. Asking how Amit Shah, JP N

Maharashtra floods: On-ground R&R hampered by VIP visits, say Pawar

Nationalist Congress Party president and senior leader Sharad Pawar has appealed to political leaders in the state not to visit the flood ravaged areas of Maharashtra as it diverts attention of those engaged in relief and rehabilitation to VIP arrangements and hampers work. The deat

Sri Lankan media baron Rajandram Rajamahendran passes away

Sri Lankan media baron, business tycoon and Chairman of The Capital Maharaja Group conglomerate, Rajandram Rajamahendran, passed away at Colombo early Sunday morning. He was 79. Rajamahendran was suffering from health problems and was receiving treatment at a private hospital in Colombo. &nb

Ganga heavily polluted with microplastics, finds study

A new study titled, ‘Quantitative analysis of Microplastics along River Ganga’ by Toxics Link has found heavy concentration of microplastics in the Ganga. All samples collected for study from the river at Haridwar, Kanpur and Varanasi were found to be polluted with microplastics.

Maharashtra flood situation grim, rescue works on

At least 79 people were killed and 56 were missing as the flood situation in Maharashtra remained grim on Saturday. Torrential rainfall in various parts of the state, coinciding with high tides and also discharge from dams, led to inundation of many regions and floods caused landslides in some places too.

Maharashtra partners with Climate Group to promote electric vehicles

Within days of announcing its new Electric Vehicle Policy 2021, Maharashtra Friday announced its partnership with Climate Group’s EV100 network to push and promote electric vehicles and reduce CO2 emissions. The policy, meanwhile, was also notified on Friday. Climate Gro

Visionary Talk with Pawan Khera, On Present State of Governance & Congress Party



Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter