So as to support non-cash transactions which were stale for quite a while after new notes came back to banks, the Reserve Bank of India defended the Merchant Discount Rate (MDR) on Wednesday. The central bank has changed the charge levels to augment the system of merchant establishments which will acknowledge card payments. The move likewise means to boost banks to put more into cash-less or less-cash payment frameworks.

The RBI said in a statement said, “Based on consultations with stakeholders on the ‘Draft Circular – Rationalization of Merchant Discount Rate (MDR) for Debit Card Transactions’, as also taking into account the twin objective of promoting debit card acceptance by a wider set of merchants, especially small ones, and ensuring sustainability of the business for the entities involved, it has been decided to rationalize the MDR for debit cards based on the following criteria:

1) Categorization of merchants on the basis of turnover.

2) Adoption a differentiated MDR for QR-code based transactions.

3) Specifying a ceiling on the maximum permissible MDR for both ‘card present’ and ‘card not present’ transactions.”

 

 

Source: FIRSTPOST