Govt to bear MDR fee on digital transactions up to Rs 2000

New Delhi: Merchant Discount Rate (MDR) applicable on all debit card, BHIM UPI, AePS transactions up to Rs. 2000 will be borne by the Government .“This facility will be for a period of two years with effect from January 1 next year and will be effected by reimbursing the same to the banks,” Finance Minister Arun Jaitley said while briefing media about the Cabinet decisions here on Friday. For all transactions less than Rs 2000 in value, the consumer and the merchant will not suffer any additional burden in the form of MDR, Jaitley said.

“This will lead to greater adoption of digital payment modes for such transactions,” Jaitley said.Stating that such transactions account for sizeable percentage of transaction volume, the Finance Minster said it will help to move towards a cashless economy.Finance Minister said the new merchant discount rate for debit card transactions at point-of-sale terminals as well as online transactions, which is effective from January 1, 2018, is pro-small merchants and the rate has been fixed after elaborate consultation with all stakeholders.MDR is the fees paid by the merchant to an acquiring bank, which sets up the point-of-sale (POS) infrastructure, for its services. A portion of this fee is passed on by the acquiring bank to the card-issuing bank in the form of interchange fee.(UNI)