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New debit card charges may prompt retailers to push for cash transactions

For shops up to revenue of Rs 20 lakh, MDR will be 0.4% of the purchase value or Rs 200, whichever is lower

BS Reporter  |  Mumbai 

Will cash disappear?

The increase in fee is set to make push for as complain of hefty charges.

The Reserve Bank of India has revised merchant discount rate (MDR) from January next year. For shops up to revenue of Rs 20 lakh per year, will be 0.4 per cent of the purchase value or Rs 200, whichever is lower. 

For stores above that bracket, will be 0.9 per cent or Rs 1,000, whichever is lower. Currently, is 0.25 per cent for purchases below Rs 1,000 and 0.5 per cent for those between Rs 1,000 and Rs 2,000.

"Any merchant who has a business of more than Rs 20 lakh will be impacted. Most of the kiranas have revenues of more than Rs 20 lakh with three-four per cent margin. Why would they pay 0.9 per cent as charges. Obviously, they will push for cash transactions," said Kumar Rajagopalan, chief executive at Association of India.

"Every merchant, be it a courier company or a travel agency, will be impacted," he said.

Even big are protesting against the change. 

A senior executive at said they would instal automated teller machine (ATMs) at stores to let withdraw money and do "The charges are quite heavy. We cannot bear it and take a hit on our margins. Passing it to will also become a challenge," said the executive. 

First Published: Fri, December 08 2017. 16:24 IST