From January 1 next year, you will not be charged fees on debit card transactions up to Rs 2,000 for at least two years.
In an effort to boost digital payments, the Union Cabinet has decided to waive the merchant discount rate (MDR) applicable on all debit cards, BHIM and UPI transactions up to Rs 2,000. The government will reimburse the same to the banks for a period of two years, starting January 1, 2018.
“Merchant Discount Rate (MDR) applicable on all debit card/BHIM UPI/ AePS transactions up to and including a value of Rs 2000 will be borne by government for 2 years with effect from 1 January, 2018 by reimbursing same to the banks,” the Cabinet decided on Friday.
“It is estimated that the MDR to be reimbursed to the banks in respect of transactions less than Rs 2,000 in value would be Rs.1,050 crore in FY 2018-19 and Rs.1,462 crore in FY 2019-20,” the government release said.
As a result of this approval, for all transactions less than Rs 2000 in value, the consumer and the merchant will not suffer any additional burden in the form of MDR thereby leading to greater adoption of digital payment modes for such transactions. Since such transactions account for sizeable percentage of transaction volume, it will help to move towards a less cash economy.
A committee comprising Secretary Department of Financial Services, Secretary Ministry of Electronics & IT and the CEO, National Payment Corporation of India (NPCI), will look into the industry cost structure of such transactions which will form the basis to determine the levels of reimbursement.
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