India to encourage electronic payments; Govt will bear merchant charge on debit card purchases

IANS
Saturday, December 16, 2017

In a bid to encourage electronic payments, the central government will reimburse the Merchant Discount Rate (MDR) applicable on transactions up to Rs 2,000 for the next two years.

According to the Minister of Electronics, IT and Law and Justice Ravi Shankar Prasad, the government will reimburse the MDR levied on transactions conducted via debit cards, BHIM UPI and Aadhaar enabled Payment System (AePS) on a transaction value of up to Rs 2,000 from January 1, 2018.

The decision to reimburse MDR to banks was taken by the Union Cabinet in its meeting held on Friday.

"The government today has taken a very major decision to accelerate digital payments in the country -- MDR charges -- of up to transactions worth Rs 2,000 shall now be reimbursed by the government," Prasad said at a press conference after the Cabinet meeting.

Consequent to the decision, transactions less than Rs 2,000 in value will not bear any additional form of MDR.

The reimbursements are estimated to cost the state exchequer Rs 1,050 crore in FY2018-19 and Rs 1,462 crore in FY2019-20.

The decision also entails formation of a committee comprising of "Secretary Department of Financial Services, Secretary Ministry of Electronics and IT and the CEO, National Payment Corporation of India (NPCI)" to look into the industry cost structure of such transactions which will form the basis to determine the levels of reimbursement.

The Union cabinet's decision follows the December 6, 2017 norms issued by the Reserve Bank of India (RBI) which put a cap on MDR applicable on transactions conducted via debit cards from January 1, 2018.

The RBI capped MDR for debit card transactions based on two newly created categories -- small merchants with turnover up to Rs 20 lakh and other merchants with turnover above Rs 20 lakh.

Accordingly, cap on PoS (Point of Sales) was kept at Rs 1,000 per transaction or 0.90 per cent of the transaction value for "other merchants", while that of Rs 200 or 0.40 per cent has been set for "small merchants".

The MDR for QR code-based transaction has been capped at Rs 200 or 0.30 per cent for "small merchants" and Rs 1,000 or 0.80 per cent for "other merchants".


Express your comment on this article

 
jinu simon john
Posted on Sunday, December 17, 2017

In my personal view , I think this is a good move - People have 2 options either to pay by cash/ Chq or pay by card. And Give a discount on the purchase on the usage of the card, you will attract more users for the card. But give a more relaxing period - 2 years is a short period.
regards
jinu simon john

Earth
Posted on Saturday, December 16, 2017

No one in this world is perfect...But no one allows to do crime and do wrong things...Those who does something wrong at anytime forgets that there is God watching them that time...Unfortunately this has become a joke and there are so many people to commit wrong doings and so many to criticise them, but no one can correct the situation...so wait and watch one day God will show all of us who is right and who is wrong...so much population on earth and very less in heaven...

XYZ
Posted on Saturday, December 16, 2017

@Human Being, it is your incorrect and biased opinion and it indirectly reflects who and what you are.

Indian
Posted on Saturday, December 16, 2017

@Human Being. Sir/Madam, just have to say one thing. God created us and said that its the mind which will differentiate between us and animals. Thus, if we have mind (better abilities than animals), then WHY VIOLENCE BETWEEN PEOPLE?? Cant people think what is right and wrong? Greed, more greed, power, useless thinking rather being productive are all problems among us which are helping politicians to incite us. But again I say, are we fools to hear and do exactly what are the saying? Just ignore my friend, let us do our task as a law abiding citizen of our country, whoever be the government (BJP or Congress doesnt matter anyways).

Human Being
Posted on Saturday, December 16, 2017

Current Govt is just killing the Citizens and drinking the blood by making several useless things,there is no development of Nation except making violence in between people.

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