The Reserve Bank of India (RBI) has lowered MDR (Merchant Discount Rate) charges on payments made through debit cards to encourage digital transactions.
The MDR rates will be reduced for the debit card transaction up to INR2,000 ($29.53) from 1 January to 31 March 2017.
For transactions up to INR1,000 ($14.76), MDR shall be capped at 0.25% of the transaction value. Additionally, for transactions at more than INR1,000 ($14.76) and up to INR2,000 ($29.53), MDR shall be capped at 0.5% of the transaction value, RBI said in a notification.
The existing MDR cap is 0.75% for transactions up to INR2,000 ($29.53) and 1% for over INR2,000 ($29.53). There is no RBI cap on MDR on credit card payments.
In consultation with the stakeholders, RBI will re-evaluate the framework for charges for electronic payment transactions during the prevailing period.
Furthermore, the central bank has ordered banks and prepaid payment instrument issuers not to levy any charges for transactions up to INR1,000 ($14.76) from 1 January to 31 March 2017.