The Union Cabinet has decided that Government will borne Merchant Discount Rate (MDR) charges on transactions up to Rs. 2,000 made through debit cards, BHIM UPI or Aadhaar-enabled payment systems (AePS) to promote digital transactions.
It will be borne by the government for two years with effect from 1 January, 2018 by reimbursing the same to the banks.
MDR is the cost paid by a merchant to a bank for accepting payment from their customers via credit or debit cards every time a card is used for payments in their stores.
In India, the RBI specifies maximum MDR charges that can be levied on every card transaction.
A Committee will look into industry cost structure of such transactions which will form basis to determine levels of reimbursement.
It will comprise of Secretary Department of Financial Services, Secretary Ministry of Electronics & IT (MeITY) and CEO, National Payment Corporation of India (NPCI).