The Hindu Business Line

RBI cuts charges on card, digital payments

For transactio­ns up to ₹1,000, commission banks charge merchants capped at 0.25%

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With the ongoing demonetisa­tion drive causing serious cash crunch in the economy, the Reserve Bank of India has announced special measures, including reducing the commission charged by banks to merchant outlets on customer transactio­ns using debit cards.

The central bank has also reduced customer charges for Immediate Payment Service (IMPS), Unstructur­ed Supplement­ary Service (USSD)-based and Unified Payment Interface (UPI) systems. It said these measures are valid from January 1, 2017 to March 31, 2017.

In order to facilitate wider acceptance of card payments, the RBI said that for transactio­ns up to ₹1,000, the merchant discount rate (MDR) will be capped at 0.25 per cent of the transactio­n value.

For transactio­ns above ₹1,000 and up to ₹2,000, the MDR will be capped at 0.5 per cent of the transactio­n value.

The central bank said these measures will not apply to ATM transactio­ns.

MDR is the commission charged by the bank that provides the necessary infrastruc­ture to the merchant to accept payments using cards.

Currently, banks are required to cap the MDR for debit card transactio­ns at not exceeding 0.75 per cent of the transactio­n amount for value up to ₹2,000 and not exceeding 1 per cent for

Also, banks and prepaid payment instrument issuers will not levy any charges on customers for transactio­ns up to ₹1,000 settled on IMPS, USSD-based and UPI systems

transactio­n amount for value above ₹2,000. To incentivis­e greater adoption of digital payments by large sections of society, the central bank said all participat­ing banks and prepaid payment instrument (PPI) issuers will not levy any charges on customers for transactio­ns up to ₹1,000 settled on the IMPS, USSD-based and UPI systems.

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