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15
December 2017
 |
Shopping (The Total
Investment & Insurance Solutions)
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.
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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.
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"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.
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Consequent
to the decision, transactions less than Rs 2,000 in value will not bear any
additional form of MDR.
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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 Total Investment & Insurance
Solutions
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. The Total Investment & Insurance Solutions
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". The Total Investment
& Insurance Solutions
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