RBI says caps on merchant discount rate to continue for low value transactions

The RBI said the MDR caps on small value transactions will continue till it comes out with final guidelines on the issue


According to the RBI’s December instructions, transactions worth up to Rs1,000 would be charged an MDR of 0.25%, while those between Rs1,000 to Rs2,000 would be charged an MDR of 0.5%. For transactions worth more than Rs2,000, the MDR has been set at 1%. Photo: Mint
According to the RBI’s December instructions, transactions worth up to Rs1,000 would be charged an MDR of 0.25%, while those between Rs1,000 to Rs2,000 would be charged an MDR of 0.5%. For transactions worth more than Rs2,000, the MDR has been set at 1%. Photo: Mint

Mumbai: The Reserve Bank of India (RBI) on Thursday said that the merchant discount rate (MDR) caps on small value transactions that the regulator had set on 16 December, 2016, will continue till it comes out with final guidelines on the issue.

In a notification on its website, the banking sector regulator said that it was examining responses and feedback it had received on the draft it released for rationalising MDR charges for debit card transactions, last month.

“Till the issuance of final instructions on MDR for debit card transactions, the extant instructions issued vide our circular dated December 16, 2016 shall continue,” the RBI said.

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According to its December instructions, transactions worth up to Rs1,000 would be charged an MDR of 0.25%, while those between Rs1,000 to Rs2,000 would be charged an MDR of 0.5%. For transactions worth more than Rs2,000, the MDR has been set at 1%.

In its draft circular, the regulator had proposed setting up of different merchant categories based on their annual income and charge MDR accordingly.

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