RBI Looks to Boost Debit Card Transactions and Cap MDR

RBI Looks to Boost Debit Card Transactions and Cap MDR

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In a major push for debit card transactions, the Reserve Bank of India today announced that it will put a limit on merchant discount rate (MDR) and create a framework for asset-light acceptance infrastructure. The regulator also said that new MDR structure will be based on the category of merchants.

“A differentiated MDR for asset-light acceptance infrastructure and a cap on absolute amount of MDR per transaction will also be prescribed,” RBI said in a statement after announcing the fifth bi-monthly monetary policy for 2017-18.

The revised MDR aims at achieving the twin objectives of increased usage of debit cards and ensuring sustainability of the business for the entities involved, the regulator said

“We thought a further push to debit card usage is needed and we decided to rationalize MDR which is intended to widen the network of merchant establishments who use debit cards,” said B.P. Kanungo, Deputy Governor, RBI. “This new rule will leave money on the table for merchants so that they add more technology.”

Data with RBI shows that volume of card payments at point-of-sale (PoS) terminals has grown over 100% since 2012 and value of such payments have risen by 65.5% during the same period. The data also showed that while 5450 million card transactions were undertaken at the end of 2017 its value stood at Rs 7421 billion.

“In recent times, debit card transactions at ‘Point of Sales’ have shown significant growth and with a view to giving further fillip to acceptance of debit card payments for purchase of goods and services across a wider network of merchants, it has been decided to rationalise the framework for Merchant Discount Rate (MDR) applicable on debit card transactions based on the category of merchants,” the regulator added in its statement.  ..

Source by:- economictimes


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