HYDERABAD: The Union finance ministry is contemplating reducing the Merchant Discount Rate (MDR) further in order to encourage the digital payment transactions. When several states wanted the MDR on debit and credit card transactions reduced, the department of financial services (DFS) in the finance ministry agreed to look into it. Rajiv Kumar, who assumed charge as DFS secretary recently, assured state government officials that the MDR rate would be reduced after examination. The central government too is planning to promote digital mode of payments and an inaugural programme was heldAfter Rajiv Kumar took charge as DFS secretary, the focus of the government again has shifted on digital payments, TS officials said.
Kumar understood that the MDR rates were high and there was need to reduce them to encourage digital payments. “The Centre may take a decision on reducing MDR rates,” officials said. According to RBI’s rules, the maximum cap on MDR for debit card transactions is 0.95 per cent and the minimum is 0.30 per cent depending on the type of merchants.
For government transactions, the flat fee of Rs 5 for transaction value up to Rs 1, 000, a flat fee of Rs 10 for transaction values between Rs 1,001 and Rs 2,000 and MDR not exceeding 0.50% for transaction value above Rs 2,001 with a cap of Rs 250 per transaction. However, so far, there has been no appropriate system with the finance ministry to assess the state-wise digital transactions. Meanwhile, the Union finance ministry also focused on Mudra loans and Stand-Up India Scheme loans which facilitate bank loans between Rs 10 lakh and Rs 1 crore to SCs and STs.
Digital awareness programme on Oct 7
The Union government wanted the states to conduct digital awareness programmes at 50 places across the country from October 2 to 7. “We have decided to conduct a programme at one place in the state on October 7,” an official in the finance department said. Chief secretary SP Singh will conduct a meeting with finance department officials on Tuesday to decide the location.