Cut merchant discounts to popularise debit cards: Study

Use of debit cards can be popularised in the country if Reserve Bank of India (RBI) accepts a proposal that banks cut fees for debit card payments by bringing down merchant discount rate (MDR) or card commissions, a study by Indian Institute of Technology, Mumbai(IIT-B), said here.

The study presents key issues relating to India's retail payment system and focuses on how the country can transit from the existing cash based retail payments to cashless payments. “Transition from the existing cash based retail payments to cashless payments can occur by promoting payment through debit cards,” Professor Ashish Das and Rakhi Agarwal of the Department of Mathematics, said in a technical report “Cashless Payment System in India- A Roadmap”, which has been submitted to the RBI.

“This will require rationalising costs associated with the use of debit cards, making them more secure and conducting focused financial education programmes for increasing public awareness,” Das said.