RBI stays firm on MDR revision

Published On: 14, Dec 2017 | Source: business-standard.com

The (RBI) made it clear on Wednesday that it would stay firm on recent revisions to the merchant discount rate (MDR). 

Retailers across the country are protesting against the RBI’s move to “rationalise” the based on the turnover of the merchant establishment. 

The is the rate charged to a merchant by a bank for providing debit and credit card services. Under the revised rule, merchants with a turnover of more than Rs 20 lakh would have to pay a maximum of 0.9 per cent of the transaction value to But for smaller establishments, the would be 0.4 per cent of the transaction value. 

The (RAI) has been vocal about the changes, but Deputy Governor B P Kanungo said in a select press interaction that the association did not provide feedback to the draft guidelines on charges when it was put out.

“I have received a request for a meeting from the Retailers Association. I have not met them; I am going to meet them. They want to articulate the issues that they have,” Kanungo said. 

“After elaborate consultations, charges have been fixed to achieve the twin objectives of giving a further fillip to debit transactions, especially at smaller merchant establishments, while making it worthwhile for to recover part of their cost so as to invest in technology, fraud prevention and security of the transactions,” he added. 

He said while the was not to be borne by the customer, it was the maximum rate and retailers often got discounts from their on the rates.

Kanungo said also needed to be adequately compensated for the infrastructure that they put out. The present set of charges would help ease those cost pressures and encourage the to build up further infrastructure.  

While there were many possible options for the central bank to adopt to minimise losses for the banks, none of them was under active consideration as of now, the deputy governor said.

“So far in our regime we have been controlling the Depending on our experience at some stage if we find that something is a better option, we can certainly consider that,” Kanungo said, adding the interchange charges varied from bank to bank, depending on the card network used.