Lok Sabha Question No. 2938 (UNSTARRED), answered on 2018-08-03
Subject: Merchant Discount Rate
Ministry: FINANCE
Asked by: LALLU SINGH

## t2938. SHRI LALLU SINGH:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government is contemplating to cut Merchant Discount Rate (MDR) on payment of transaction made through cards;
- (b) if so, the details thereof;
- (c) whether the Government is aware that after the introduction of 'Digidhan Mission' to promote digital payments consumers are being forced to make payments through digital mode and if So, the details thereof;
- (d) whether it is not appropriate to do away with MDR completely instead of curtailing its rate which is a burden on the consumers and if the details thereof; and SO,
- (e) the reaction of the Government in this regard?

## Answer

## The Minister of State in the Ministry of Finance (SHRI SHIV PRATAP SHUKLA)

- (a)&(b) RBI vide its notification dated December 06, 2017 on 'Rationalization of Merchant charges that can be charged by banks from merchants on payments made though Debit cards. The details are Annexed.

Further, as informed by Ministry of Information and Technology (MeitY), in order to promote digital payment transactions among small and micro merchants, Government of India has come out with a Scheme vide its gazette notification No 6(191/2017-DPD-1 dated December 2017 for reimbursement of Merchant Discount Rate (MDR) charges on Debit cardsIBHIM-UPIIBHIM Aadhaar transactions for a value less than Rs 2000 to the banks for a period of two years starting from Jan 2018 27th Pay

- (c) As informed by Ministry of Information and Technology (MeitY) , 'DigiDhan Mission' has been set up at MeitY to promote digital payments. It does not intend to force anyone to make a payment through digital mode.
- (d) & e) As apprised by MeitY , MDR is charged by banks from Merchants. As per extant RBI notification dated 06.12.2017 banks are also advised to ensure that merchants onboarded by banks do not pass on MDR charges to customers while accepting payments through debit cards:

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION No. 2938

TO BE ANSWERED ON FRIDAY, August 3, 2018/Shravana 12, 1940 (Saka)

## Merchant Discount Rate

Annexure as referred to in (a) of the reply to the Lok Sabha Unstarred Question No. 2938 to be answered on Friday, August 3, 2018/Shravana 12, 1940 (Saka) part

The maximum MDR for debit card transactions as per RBI circular dated 06.12.2018 on Rationalisation of Merchant Discount Rate (MDR) for Debit card Transactions:

|   Sr. No. | Merchant Category                                                                    | Merchant Discount Rate (MDR) for debit card transactions (as a % of transaction value)                                 | Merchant Discount Rate (MDR) for debit card transactions (as a % of transaction value)                |
|-----------|--------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|
|         7 | Small merchants (with turnover uptoRs: 20 lakh during the previous financial         | Physical POS Infrastructure including online card transaction Not exceeding 0.40% (MDR cap of Rs. 200 per transaction) | QR code-based card acceptance infrastructure Not exceeding 0.30% (MDR cap of Rs. 200 per transaction) |
|         2 | Other merchants (with turnover above Rs. 20 lakh during the previous financial year) | Not exceeding 0.90% (MDR cap of Rs: 1000 per transaction)                                                              | Not exceeding 0.80% (MDR cap of Rs. 1000 per transaction)                                             |