Business Standard

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

RBI has been requested to grant time for effecting these changes

Related News

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.

RBI 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," RBI said.

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

On June 28, RBI 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 RBI 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, RBI said last week.

Read more on:   
|
|

Read More

RBI says open to revisiting priority sector lending norms

Even though the final guidelines on priority sector lending (PSL) was released over a fortnight ago, the Reserve Bank today said it is open to ...

Quick Links

More news from Finance Rss icon

Rupee volatility could delay rate cuts by RBI

Markets are in uncertain mood at home and abroad, with FIIs moving out from here in recent days; many feel the central bank would take its time

ICICI Bank, Bank of Baroda fined for flouting KYC norms

ICICI Bank has been slapped with a fine of Rs 50 lakh, while BoB has been levied a fine of Rs 25 lakh

NRIs pump back more dollars on falling rupee

With the ongoing fall in the rupee, the remittances volume has seen a massive spike as high networth individuals have started sending more money ...

Back to Top