RBI to Rationalize Debit Card Charge Schedules
The Reserve Bank of India is aiming to get more people to use digital monetary transactions. The merchant discount rate will be transferred to a turnover-based schedule. The ways how debit card transactions are read will be changed as a means of improving upon how different plans are reviewed.
The MDR Will Be Rationalized
The Merchant Discount Rate or MDR will be rationalized as a means of helping people with using cards to take care of many payments. This would improve upon the cashless society standards that are aiming to be followed. This is thanks in part to vendors being hit with smaller MDR totals in the future. The current MDR is at 0.75 percent for transactions of less than Rs. 2,000 and 1 percent for anything worth more. Those numbers are expected to change.
In the next rationalization plan, customers will be encouraged to start using card payments. RBI had planned to rationalize charges last year and those plans are now coming into fruition.
How Rationalization Will Work
The plans for rationalization will work with a few key steps:
- Debit card transactions will be categorized by the government and charged based on their purposes. Such transactions may also be categorized based on the amount of business being handled by a vendor.
- Smaller merchants with a turnover of less than Rs. 20 lakh in a year will have an MDR of 0.4 percent for debit card payments. The MDR will be lower at 0.3 percent for online payments.
- Other merchants that get a turnover of more than Rs. 20 lakh a year will be up to 0.95 percent for debit card payments and 0.85 percent for online transactions.
- The charges for government transactions will be set at a flat rate in most cases. It will be Rs. 5 for transactions under Rs. 1,000 or Rs. 10 for deals up to Rs. 2,000. The MDR will be 0.5 percent for all other transactions involved.
This all comes as many vendors are trying to keep such costs down. This comes as demonetization is causing more businesses to take in card-based payments. The need to rationalize charges comes among complaints from many of these parties.
Light Card Acceptance To Be Promoted
The RBI is also aiming to create a new plan for getting light cards accepted by more vendors. This may work with programs like the QR code system. This is to improve upon how wireless payments may be handled in many places.