No debit card swipe fee for payments up to ₹2 K

DIGITAL PUSH From Jan 1, merchant discount rate to be borne by govt for 2 years

In a major push to make India a less-cash economy, the Union cabinet on Friday decided to waive the merchant discount rate (MDR) applicable on digital payments pertaining to the retail sector up to a certain threshold.

MDR applicable on transactions made through debit cards, the Unified Payments Interface (UPI) and Aadhaar-enabled payments system up to and including a value of ~2,000 will be borne by the government for a period of two years with effect from January 1, said Ravi Shankar Prasad, information technology (IT) and law minister, while announcing the cabinet decision.

MDR is the charge paid by a merchant to a bank for accept- ing payment from customers via credit or debit cards. It is expressed as a percentage of the transaction amount.

It is estimated that the MDR to be reimbursed to banks in respect of transactions less than ~2,000 in value will be ~1,050 crore in FY19 and ~1,462 crore in FY20, a government statement said.

“As a result of this approval, for all transactions less than ~2,000 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,” the statement added.

“This is a revolutionary step to encourage digital payments for all retailers. Now, paying through digital modes has been made at par with cash payments... in fact, better. Cashless modes will have an edge over cash because of additional convenience and freedom from fake or counterfeit currency,” said Sunil Kulkarni, joint managing director at Oxigen Services (India) Pvt. Ltd, an e-wallet and payment solutions company.

The statement also said that a committee comprising the secretary, department of financial services; secretary, ministry of electronics & IT; and the CEO, National Payments Corporation of India, will look into the industry cost structure of such transactions, which will help determine the levels of reimbursement.