Oil marketing firms propose new MDR, banks yet to agree
State-owned fuel retailers have proposed a merchant discount rate (MDR) of 0.65% for purchases using credit and debit cards, but banks which set up the card swipe machines are yet to agree, three people aware of the matter said.
Oil marketing companies, which are paying MDR, or card transaction fees, to banks on behalf of their dealers for a year now are trying to reduce their financial burden, while banks fear a lower MDR would hurt them.
“We have almost reached a resolution on this. The oil marketing companies (OMCs) have taken a position and now, the banks and government have to decide on this. We have asked them to charge 0.65% as MDR. Earlier, there were discussions on fixing it at 0.75% on transactions above ₹2,000, but now we have asked them to charge 0.65%.
MUMBAI:
In rupee terms, even the 0.10% difference would be big,” said the first of the people cited above, who works with one of the OMCs. He spoke on the condition of anonymity.
Emails sent to Indian Oil Corp. Ltd (IOC), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL) on February 7 remained unanswered until press time.
Every debit card transaction attracts a fee called MDR. This is paid by the merchant (in this case, the fuel company) and shared by banks which put up the swipe machine and issue the card, and payment networks like Visa and MasterCard. MDR is not passed on to customers.
An OMC official explained that in case a fuel retail outlet receives debit card transaction worth ₹5,00,000 in a day, 0.10% of that would be ₹500 per day, per outlet.