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Govt. to return MDR to banks to boost digital:
Context
The Centre said it would reimburse the merchant discount rate (MDR) applicable on digital transactions up to ₹2,000 for the next two years to give a fillip to digital payments in the country.
To cover transactions of up to ₹2,000
- This will be applicable on transactions done using debit cards, UPI BHIM application or Aadhaar.
- The decision, cleared by the Cabinet, was expected to cost the exchequer more than ₹2,500 crore.
MDR
MDR is payable by the merchant to the bank when a payment is made at a merchant point of sale
Data
As per government’s estimates, the total MDR to be reimbursed to the banks in respect of transactions worth less than ₹2,000 in value would be ₹1,050 crore in FY 2018-19 and ₹1,462 crore in FY 2019-20.
High Volume
Digital transaction below ₹2,000 account for about 15-20% of the payments in terms of value. In volume terms, it was much higher.
The Committee
- A Committee comprising Secretary, Department of Financial Services, Secretary Ministry of Electronics & IT and the CEO, National Payment Corporation of India (NPCI) will look into the industry’s cost structure of such transactions to determine reimbursement level.
- The committee will also see that the scheme is not misused
