Government may compensate banks for loss of MDR, says IT secretary

The move is part of the Budget proposal, where the government has earmarked Rs 1,500 crore for the promotion of digital payments this fiscal

The Centre is considering ways to incentivise banks and payment intermediaries to promote digital transactions, a top government official said. One of the proposals is to compensate banks for the loss of Merchant Discount Rate (MDR), which was brought down to zero in December 2019.
 

“MDR is one of the areas in which banks require support. If we keep MDR at zero, they will face losses,” said Ajay Sawhney, secretary, Ministry of Electronics and Information Technology (Meity), in an interview. “We had compensated them (banks) earlier and are looking at various options now.”
 

MDR is a fee which merchants are