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The story of merchant discount rates

RBI revised merchant discount rates for debit cards to promote debit card acceptance by wider set of merchants

Abhineet Kumar 

The story of merchant discount rates

The Reserve Bank of India (RBI), through a notification on Wednesday, revised (MDR) for debit cards to “promote debit card acceptance by wider set of merchants”. This will increase the rate charged to most merchants by their banks for providing debit card transaction services. The has done so by defining small merchants who have annual turnover of up to Rs 20 lakh. Retail is a wafer-thin margin business of 2-5 per cent.

As such, these merchants would have a monthly income of approximately Rs 8,333. It is impractical to convince them to use debit card and QR code facility at the cost of parting 0.4 per cent (POS) or 0.3 per cent (QR) of their income. For merchants with over Rs 20 lakh turnover, the is now at an all-time high of 0.9 per cent (POS) and 0.8 per cent (QR) for transactions up to Rs 2,000. For transactions above Rs 2,000, the rate comes down to 0.9 per cent (POS) and 0.8 per cent (QR) from the current 1 per cent. Retailers up the ante against revised merchant discount rates

First Published: Mon, December 11 2017. 00:22 IST
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