Following the demonetization of Rs 500 and Rs 1000 notes, online payment gateway CCAvenue, along with its partnering banks has slashed its domestic debit card processing rates to 0.10% and service tax for all MasterCard, Visa and Maestro Cards from today to 31 December, 2016. Previously, CCAvenue used to charge 2% processing fee for debit card transactions.
“This transaction fee is being levied only to meet our operational and technical costs, switching expenses and payment gateway charges,” CCAvenue added in a release. For a transaction of Rs 100, amount payable to merchants will be Rs 99.89 after a deduction of 0.10% transaction fee + 15% service tax on fees.
Meanwhile, Razorpay has waived off all service charges on debit card transactions for all of its 10,000 merchants, from 24 November to 31 December, 2016. “Though we have not received confirmation regarding the waiver from all our partner banks, we have decided to launch zero transaction cost for debit cards across all our merchants. We acknowledge and support the effort by RBI to promote online transactions,” Harshil Mathur, CEO of Razorpay said.
For the duration of the demoentization, the government has also waived the online charges on RuPay cards. Earlier this week, the government asked banks to waive the merchant discount rate (MDR), an inter-bank exchanged fee, on debit card payments until 31 December to encourage customers to use digital transactions. All public sector banks and some private lenders agreed to waive these charges.
For debit cards, the Reserve Bank of India has capped the MDR for transactions up to Rs 2,000 at 0.75% and at 1% for all transactions above Rs 2,000. The MDR is split between the bank issuing the card and bank accepting the payment. Typically, for debit card transactions, issuing banks make around 0.5% out of the 0.75% interchange fee.
RuPay’s network charges a flat fee of Rs. 0.9 per transaction on PoS terminals (Rs 0.6 from the issuing bank, and Rs 0.3 from the acquiring bank).