Retailers are planning a coordinated campaign on platforms such as Twitter and Facebook to highlight how the latest revision in the charges they pay to enable debit card transactions is an anticonsumer move and one that would benefit banks and card issuers. They are trying to broad-base their campaign by bringing on board ecommerce companies, airlines and telecom operators, among others, to oppose the changes in the cost of debit card transactions.
"There are repercussions for all merchants," said Kumar Rajagopalan, chief executive officer of the Retailers Association of India. The association is trying to rope in "everybody in online space, travel and tourism, hotels, telecom," he said.
One CEO set the ball rolling on Friday with a tweet on how the decision could discourage cashless transactions. "This move contradicts #DigitalIndia that we are all driving. I hope, @NITIAayog will notice the avoidable contradiction. We would like to be encouraged to drive digital payments, not punished! Please, @amitabhk87," Damodar Mall, chief executive officer for grocery at Reliance Retail, said on Twitter on Friday.
One retail veteran suggested in a message to a WhatsApp group of retail CEOs that companies must use their social media teams to run a "whole hog" campaign and a team of "media savvy" CEOs should clear the posts so that the necessary impact is created, according to a retail CEO who asked not to be identified.
The retailers plan to bombard social media with posts tagging the Prime Minister's Office and the finance, commerce and textile ministers. "We will do a major tamasha on social media," Rajagopalan said.
The group will also petition the finance minister, the Reserve Bank of India and Amitabh Kant, CEO of Niti Aayog, the government's think tank.
The RBI revised the merchant discount rate for debit card transactions on Wednesday. Starting January 1, for shops with a turnover of up to Rs 20 lakh in the previous financial year, the MDR will be 0.4% of the purchase value or Rs 200 per transaction, whichever is lower. At bigger stores, the MDR will be 0.9% of the purchase value or Rs 1,000, whichever is lower. The RBI set a different rate for QR-code based transactions, with similar caps in the two categories.
Currently, the MDR is 0.25% for purchases up to Rs 1,000 and 0.5% for transactions between Rs 1,000 and Rs 2,000. For higher amounts, the rate is 1%. There is no categorisation based on annual revenue. The RBI said it decided to rationalise the MDR for debit cards based on consultations with stakeholders and with the objective of promoting wider debit card acceptance, especially by small merchants, and ensuring the sustainability of their businesses.
Kirana Stores at a loss
The Confederation of All India Traders, which also represents small shopkeepers, said the RBI move will not help kirana stores, estimating their average annual turnover at above Rs 20 lakh. Metro Cash and Carry said most of its kirana clients clock annual revenue of Rs 24 lakh to Rs 60 lakh and accepting debit cards will erode their profit by 20% due to MDR payments.
"We are still studying the RBI direction to understand it better. We will engage with regulatory bodies to present our views on the same," an Amazon spokesperson said. In their social media campaign, the retailers plan to emphasise that the MDR revision will only help banks and card issuers. "There is no logic on who uses QR codes in this country," said a top CEO of a retail group, asking not to be identified.
"The real story is that banks are trying to make a profit out of this... In China, the MDR charge is 0.2% on all cards put together and in India it is about 2%. How can business succeed if MDR charges are so high?"
The campaign will highlight how consumers may be affected because prices of essentials will increase, with retailers and restaurants planning to pass on the increased costs.
"Retailers are feeling the pinch and that must be communicated loud and clear," said Riyaaz Amlani, a managing committee member of the National Restaurant Association of India. "The general public also needs to know why the costs are going up. At the end of the day, the customers will get impacted as my input costs have gone up."
Retailers said the cost of doing business will go up by 0.5-0.6 percentage points. The RBI has said MDR charges are not to be borne by customers. Banks are advised to ensure that merchants on-boarded by them do not pass on MDR charges to customers while accepting payments through debit cards, the RBI said in its notification on December 6.