NEW DELHI: According to the government, the practice of merchants asking customers to bear the cost of MDR for making payments through debit cards forces people to make cash payments despite having debit cards. This is also the reason for people not using BHIM UPI platform and AePS, according to an official.
The move to waive MDR for transactions up to Rs 2,000 will mean the consumer and the merchant will not suffer any additional burden and the government hopes it will boost e-money in the country.
Minister of state for Finance Ministry Arjun Ram Meghwal in March this year told Lok Sabha in a written reply that the data on payment system indicators such as Paper Clearing, National Electronic Fund Transfer and National Automated Clearing House (NACH)…showed a decline in January 2017 compared to December 2016.
He also elaborated that in order to facilitate wider acceptance of card payments, the following special measures for debit card transactions (including for payments made to the government) have been introduced for a temporary period between January 1, 2017 and March 31, 2017.
For transactions up to Rs 1,000, MDR has been capped at 0.25 per cent of the transaction value. For transactions above Rs 1,000 and up to Rs 2,000, MDR has been capped at 0.5 per cent of the transaction value. A committee led by Secretary Department of Financial Services, Secretary Ministry of Electronics and IT and the CEO of the NPCI will look into the industry cost structure