To encourage digital transactions, the Reserve Bank on Friday decided to slash MDR charges on payments made through debit cards and do away with levies on small transactions through mobile phones and Internet from January 1 to March 31.
The Merchant Discount Rate (MDR) for debit card payments, including for payments made to government, will be capped at 0.25 per cent for transactions up to Rs 1,000 and 0.5 per cent between Rs 1,000-2,000, RBI said in a notification. The existing MDR cap is 0.75 per cent for transactions up to Rs 2,000 and 1 per cent for over Rs 2,000. However, there is no RBI cap on MDR on credit card payments.
RBI said reduced charges will “come into effect from January 1, 2017 and shall be applicable till March 31, 2017. In the intervening period, Reserve Bank will review the framework for charges for electronic payment transactions, in consultation with the stakeholders.
Similarly, it has asked banks and prepaid payment instrument issuers not to levy any charges for transactions up to Rs 1,000 from January 1 to March 31.