Govt waives off MDR charges for digital transactions up to Rs 2,000

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New Delhi: To encourage widespread use of digital payments, the government on Friday said no Merchant Discount Rate (MDR) charges will be levied on debit card transactions of up to Rs 2,000.

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, decides Union Cabinet on Friday.

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 Rs 20 lakh has been fixed at 0.40 percent.

In case the annual turnover of a merchant is over Rs 20 lakh, the MDR charges would be 0.90 percent.

In order to promote digital payments, the Reserve Bank has earlier come out with differentiated merchant discount rates (MDR) for debit card transactions, prescribing separate caps for small and large traders.

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