RBI slashes MDR charges on transactions by upto Rs 2,000

The Reserve Bank of India (RBI) on Friday capped the merchant discount rate (MDR) on debit card transactions of up to Rs 2,000 to a maximum of 0.5 per cent of the transaction value, on a temporary basis till March 31.

For transactions up to Rs 1,000, the MDR would be 0.25% of the value and for transactions above Rs 1,000 and up to Rs 2,000, the MDR charged would be capped at 0.5%, effective January 1. 

The earlier cap was 0.75% of the transaction amount for value upto Rs 2,000 and 1% for transaction amount for value above Rs 2,000.

The cap will not be applicable on ATM transactions, which are free till December. 

Earlier in the day, the central bank had instructed banks and other prepaid instrument service providers not to charge any fee in the period for transactions charges up to Rs 1,000 using Immediate Payment Service (IMPS), USSD-based *99# and Unified Payment Interface (UPI) systems.