Dilip Asbe

Dilip Asbe, CEO & MD, NPCI

National Payments Corporation of India (NPCI) has rationalised its merchant discount rate (MDR) for RuPay debit card transactions effective October 20, 2019. The government-back retail payments body is the owner of RuPay cards and the slash in MDR is done to boost its usage.

NPCI has rationalised MDR across the point-of-sale (PoS), eCom and BharatQR code based merchant transactions, it said in a press statement on Friday. It further added that the MDR has been revised to 0.60% for transaction above INR 2,000 with a maximum cap of INR 150 per transaction. Presently, this is capped at 0.90% for transaction above INR 2,000 with a higher cap of INR 1,000 per transaction.

“With the reduction and capping of MDR, merchants will now be encouraged to accept debit cards, which up till now they were averse, due to higher MDR structure,” NPCI’s managing director and CEO Dilip Asbe said.

He further added that, “NPCI’s commitment to helping faster migration from cash to digital, this MDR rationalisation along with the similar significant reduction in UPI MDR, will benefit all categories of merchants.”

NPCI has also reduced MDR on card-based QR transactions. (Bharat QR) MDR also has been reduced to 0.50 per cent with a maximum cap of INR 150 per transaction, to boost asset lite infrastructure for digital payments.

RuPay was devised to promote digital transactions in rural areas of India. However, lately, the NPCI has been carrying out several initiatives to encourage the indigenously developed card not only within the country but also overseas. The government has already launched the RuPay cards in UAE and Bhutan. The plan is to expand the card network globally to take on players such as Visa and Mastercard.

For the uninitiated, MDR is a charge levied for making card transactions both offline and online and is distributed among all the parties involved, including the card companies, banks and the POS terminal providers. The charges range from INR 12- INR 15 per transactions on the amount above INR 2,000.

In July this year, the Indian government announced that there would be no MDR charges for customers and merchants even for higher value transactions done via debit cards. It was done to boost digital transactions among the customers.

This, however, has not gone down well with the cards network companies and PoS players as no-MDR leaves them without any revenues.

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by Priyanka Pani
Senior Regional Correspondent, Middle East and Asia
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