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RBI wants differentiated debit card MDR for POS machines & QR codes

To promote payments on debit cards, the Reserve Bank of India (RBI) has proposed new slabs for merchant discount rate (MDR) banks will be allowed to charge merchants, in a draft paper. The RBI floated a concept paper in March 2016 which was looking to increase the card transactions in the country and push card acceptance network.  MDR is an inter-bank exchange fee that banks charge merchants for enabling digital transactions. "The inputs received for this paper, along with interactions with the industry representatives, has reinforced the felt need for wider acceptance of card payments by merchants in general, with a specific focus on rapid adoption by the smaller merchants," the RBI added in it the paper. Note that the RBI has also proposed differentiated MDR between acquiring infrastructure involving physical terminals (POS machines, mPOS etc) and digital acceptance infrastructure models (such as QR codes).   Following the demonetization of Rs 500 and Rs 1000 notes, up to March 31st, for debit cards, the RBI has allowed banks to charge merchants 0.25% of the transaction value as MDR, for transactions up to Rs 1000, and 0.5% from Rs 1000 to Rs 2000. Earlier, the debit card MDR for banks was capped at 0.75% of the transaction amount for value up to Rs 2000 and not exceeding 1% for transaction amount for value above Rs 2000. The proposed slabs for debit card MDRs are: - Small merchants with turnover outside the ambit of GST (turnover less than Rs 20 lakhs per annum) - Government transactions -…

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