In order to promote digital payments, RBI has come out with differentiated merchant discount rates (MDR) for debit card transactions, prescribing separate caps for small and large traders.
MDR is the rate charged to a merchant by a bank for providing debit and credit card services.
As per the latest notification, MDR charges for small merchants with an annual turnover of up to 20 lakh rupees has been fixed at 0.4 per cent with a cap of 200 rupees per transaction by debit cards through Point of Sale (PoS) machines or online transactions.
For accepting payments via QR (quick response) code based transactions, the charge will be 0.3 per cent subject to a cap of 200 rupees per transaction.
In case the annual turnover of a merchant is over 20 lakh rupees, MDR charges would be 0.9 per cent with a cap of 1,000 rupees per transaction. If the transaction is through QR code, the charges will be 0.8 per cent with a similar cap.
The directions will come into effect from 1st January.
