Govt to bear digital transaction for MDR charges upto Rs 2,000

Mangalore Today News Network

New Delhi, Dec 15, 2017 : In a bid to boost digital payments, the government on Friday decided to bear the cost of merchant discount rate (MDR) charges for digital transactions up to Rs 2,000 made through debit cards, BHIM UPA or Aadhaar-enabled payment system for two years beginning January.

 

When payment is made at a merchant point of sale, MDR is payable by the merchant to the bank. Citing this, many people make cash payments in spite of having debit cards. Similarly, MDR is charged on payments made to merchants through BHIM UPI platform and AePS.

"The Union Cabinet chaired by Prime Minister Narendra Modi has approved that the merchant discount rate (MDR) applicable on all debit card/BHIM UPI/Aadhaar enabled Payment System (AePS) transactions up to and including a value of Rs 2,000 will be borne by the government for a period of two years with effect from 1st January, 2018 by reimbursing the same to the banks," an official statement said after the Cabinet meeting.

The move will cost the exchequer Rs 2,512 crore till 2020.

"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 a sizeable percentage of transaction volume, it will help move towards a less cash economy," the statement said.

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, it said.



courtesy: DHNS