MDR charges to be borne by Centre in bid to boost digital payments

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Published: December 16, 2017 4:09 AM

To promote digital transactions, the Union Cabinet on Friday approved a proposal mandating that government will bear the merchant discount rate (MDR) charges on transactions up to Rs 2,000 on all debit card, BHIM UPI and Aadhaar-enabled payment systems.

Union Cabinet, MDR, Merchant Discount rate, BHIM UPI, Aadhaar, MDR chargesTo promote digital transactions, the Union Cabinet on Friday approved a proposal mandating that government will bear the merchant discount rate (MDR) charges on transactions up to Rs 2,000 on all debit card, BHIM UPI and Aadhaar-enabled payment systems. (Image: IE)

To promote digital transactions, the Union Cabinet on Friday approved a proposal mandating that government will bear the merchant discount rate (MDR) charges on transactions up to Rs 2,000 on all  debit card, BHIM UPI and Aadhaar-enabled payment systems. This means apart from merchants, consumers will not  have to bear any charges on such transactions.  The MDR subsidy will apply on transactions from January 1 for a period of two years. The Centre is estimated to reimburse Rs 1,050 crore to banks in FY19 and Rs 1,462 crore in FY20 towards MDR subsidy.  The move follows a recent slowdown in digital transactions, which had surged post-demonetisation. In another decision, the Cabinet approved a Rs 2,600-crore special package for the leather and footwear sector, which has the potential to generate 3.24 lakh jobs in three years and assist in the formalisation of 2 lakh jobs.

The scheme would lead to development of infrastructure for the leather sector, address environment concerns, facilitate additional investments, aid employment generation and increase production. Under this scheme, it is proposed to provide the employers’ contribution of 3.67% to Employees’ Provident Fund for all new employees under the salary bracket of Rs 15,000, enrolling in EPFO for first three years of their employment. At present, 8.33% of the employer’s contribution is already being provided by the government under Pradhan Mantri Rozgar Protsahan Yojana.  To strengthen healthcare and education facilities, a new central sector scheme, “North East Special Infrastructure Development Scheme”, was approved with 100% funding from the Centre to fill up the gaps in creation of infrastructure in specified sectors till March 2020.

The National Ayush Mission was also extended up to March 31, 2020, with an outlay of Rs 2,400 crore over the three-year period. The mission was launched in September 2014. Among other major decisions on Friday, the Cabinet approved capital investment subsidy amounting to Rs 264.67 crore to four industrial units located in northeastern region including Sikkim.

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