The Reserve Bank of India (RBI) last week notified the revised rate of maximum MDR applicable to debit card transactions.
Based on consultations with stakeholders on the “Draft Circular – Rationalisation of Merchant Discount Rate (MDR) for Debit Card Transactions”, the Bank has to rationalise the MDR for debit cards based on the following criteria.
A. Categorisation of merchants on the basis of turnover. B. Adoption of a differentiated MDR for QR-code based transactions. C. Specifying a ceiling on the maximum permissible MDR for both ‘card present’ and ‘card not present’ transactions.
The recent notification stated issued by the RBI reduces transaction charges using debit cards with effect from 1st January 2018 with an object to promote debit card acceptance by a wider set of merchants, especially small merchants, and to ensure sustainability of the business for the entities involved
As per the notification, MDR charges for small merchants with an annual turnover of up to Rs 20 lakh has been fixed at 0.40 percent with a cap of Rs 200 per transaction by debit cards through Point of Sale (PoS) machines or online transactions.
Subscribe Taxscan Premium to view the Judgment
