The Reserve Bank of India (RBI) has rationalised merchant discount rate (MDR) slabs and linked it to merchant revenue to enable small businesses to start accepting card payments.
MDR is the commission paid by a merchant to a bank for providing debit and credit card services.
Under the new rules, small merchants with revenue less than INR2m ($30,980) will have to pay 0.4% of transaction value or INR200, whichever is lower. For other merchants, MDR is capped at 0.9% of transaction value or INR1, 000, whichever is lower.
For QR code-based payments, the MDR has been capped at INR200 or 0.30% for small marchants and INR1,000 or 0.80% for other merchants.
The central bank in its statement said: “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 chose to rationalise the framework for Merchant Discount Rate (MDR) applicable on debit card transactions based on the category of merchants.”
The new MDR slabs will come into effect from 1 January 2018.