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:   
|
|

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

RBI has been requested to grant time for effecting these changes

The Reserve Bank today said reduction in merchant discount rate (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.

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.

image

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 ...

Recommended for you

Advertisements

Quick Links

More news from Finance Rss icon

RBI may cut repo rate by 25 bps on June 2: Assocham

The industry body also estimated that the RBI may cut the benchmark interest rate by another 0.50% in the two quarters post the June 2 monetary ...

RBI likely to cut policy rates by 0.25% on June 2: Citi

According to Citigroup report, lending rates have softened by 15-25 bps since the April policy

SBI General posts 33% rise in premium for FY15

During the last fiscal, the insurer generated 70% of its business from the retail segment

Back to Top