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Discount on card-payment acceptance postponed to Sept 1: RBI

RBI has been requested to grant time for effecting these changes

Press Trust of India  |  Mumbai 

The Reserve Bank today said reduction in (MDR) for purchases made by debit card payment to 0.75-1%, which was to be effective from July 1, will now be applicable from September 1 due to some operational issues.

MDR is the fees charged by banks (or the issuer of debit card) from a businessman for accepting payment through debit or credit cards from their customers. It stands at 2-3% at present.

"We have received several representations from banks and system providers that implementation of the directive needs to be preceded by modifications in the computer systems and agreements with merchants," said in a notification.

has been requested to grant time for effecting these changes, it said.

"In view of the operational difficulties...It has been decided to allow extension of time till end of August, 2012 to comply with the directions on merchant discount rates," said.

Accordingly, the scheme will become operational from September 1, 2012, the notification said.

On June 28, had slashed the merchant discount rates to not more than 0.75% for debit card purchases up to Rs 2,000. For purchases over Rs 2,000, the MDR was limited to not more than one per cent.

These rates were applicable from July 1, 2012.

The directive had come to encourage usage of debit cards, especially by small merchants or service providers and location.

Until now, the MDR on debit and credit cards has been similar in the country.

Where debit card is mostly used as per availability of funds, credit card usage is linked to the credit limit sanctioned by the issuer (or the bank) and carries and element of credit risk.

Since the nature of two products is different there was no rationale of charging similar MDR for debit and credit cards, said last week.

First Published: Wed, July 04 2012. 17:16 IST
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