The story of merchant discount rates

RBI revised merchant discount rates for debit cards to promote debit card acceptance by wider set of merchants

The Reserve Bank of India (RBI), through a notification on Wednesday, revised merchant discount rates (MDR) for debit cards to “promote debit card acceptance by wider set of merchants”. This will increase the rate charged to most merchants by their banks for providing debit card transaction services. The RBI has done so by defining small merchants who have annual turnover of up to Rs 20 lakh. Retail is a wafer-thin margin business of 2-5 per cent. As such, these merchants would have a monthly income of approximately Rs 8,333. It is impractical to convince them to use debit card and