The Reserve Bank of India rationalized the merchant discount rate (MDR) on debit cards and has set up a differentiated regime if the transaction occurs on a physical POS machine or it occurs on QR codes through the BharatQR. MDR is an inter-bank exchange fee that banks charge merchants for enabling digital transactions. Accordingly, the MDR for debit cards will be: Small merchants (with a turnover up to Rs 20 lakh during the previous financial year) will have to pay a maximum of 0.4% of a transaction on a physical POS or online. This will be capped at Rs 200 per transaction. Small merchants who use QR code-based card acceptance infrastructure such as BharatQR will have to pay 0.3% of a transaction. This will be capped at Rs 200 per transaction. Other merchants (with a turnover of over Rs 20 lakh during the financial year) will have to pay a maximum of 0.9%. This will have an MDR cap of Rs 1000 per transaction. Other merchants who use QR code-based card acceptance infrastructure such as BharatQR will have to pay 0.8% of a transaction. This will be capped at Rs 1000 per transaction. However, payment companies and retail associations say that the latest order from the RBI will have a detrimental effect on the spread of POS machines and usage of debit cards. Here is what they are saying Vishwas Patel, CEO of CC Avenue While Patel welcomed the reduction in the overall reduction of the MDR for debit cards and felt that it would help in getting smaller merchants onboard,…
