A big boost to digital payments has come from the Reserve Bank of India (RBI), which on Wednesday, came out with differentiated merchant discount rates (MDR) for debit card transactions, prescribing separate caps for small and large traders. As per the latest notification, MDR charges for small merchants with an annual turnover of up to Rs 20 lakh has been fixed at 0.40% with a cap of Rs 200 per transaction by debit cards through Point of Sale (PoS) machines or online transactions. The new rates will come into effect from January 1.
RBI said rationalisation of the charges is being undertaken with a view to achieving the twin objectives of promoting debit card acceptance by a wider set of merchants, especially small traders, and ensuring sustainability of the business for the entities involved.
For accepting payments via QR (quick response) code based transactions, the charge will be 0.30% subject to a cap of Rs200 per transaction. MDR is the rate charged to a merchant by a bank for providing debit and credit card services.In case the annual turnover of a merchant is over Rs20 lakh, the MDR charges would be 0.90% with a cap of Rs1,000 per transaction. If the transaction is through QR code, the charges will be 0.80% with a similar cap.
Following demonetisation, the RBI had in December last year capped the MDR charges at 0.25% for transactions up to Rs1,000. For transactions above Rs1,000 and up to Rs2,000, it was capped at 0.5% of the transaction value. Before that, the MDR was capped 0.75% for transaction up to Rs2,000 and not exceeding 1% for payments above Rs2,000.
Value of digital transactions across the country has increased by 80% with the total amount expected to reach Rupees 1,800 crore in 2017-2018, official data suggests. The value of digital payments till October this year was at Rupees 1,000 crore, nearly equal to the value for entire 2016-2017. According to the Ministry of Information Technology, digital payments registered Rs 136-138 crore on an average from June-August keeping on the trend from the beginning of the year.