Govt mulls cut in MDR charges on card buys

Last week, RBI had drastically cut MDR charges on debit card payments from April 1

The government is working to reduce the merchant discount rate (MDR) to encourage digital payments, NITI Aayog Chief Executive Officer Amitabh Kant said on Tuesday.

“We are pushing digital transactions. Our aim is to bring down MDR charges. If the volume of transactions increases, MDR charges will come down,” Kant said. 

Referring to the Reserve Bank of India (RBI)’s recent draft circular on rationalisation of MDR for debit card transactions, the NITI Aayog CEO said, “We are examining RBI’s draft circular on MDR. There are challenges…. We will meet those challenges.”

Last week, the RBI had proposed drastically cutting MDR charges on debit card payments from April 1 to maintain the momentum of digital transactions after the note ban. 

For small merchants with annual turnover of Rs 20 lakh and special category merchants, like utilities, insurance, mutual funds, educational institutions and government hospitals, the MDR charge has been proposed at 0.40 per cent of the transaction value.