MDR is a roadblock to digital payments

Traders asking consumers to pay bank charges

October 04, 2017 11:47 pm | Updated 11:48 pm IST - HYDERABAD

The continuing campaign on promotion of cashless transactions notwithstanding, digital transactions in the State appear to have hit a roadblock with the merchant discount rates (MDR) charged on debit and credit card transactions turning out to be a discouraging factor for consumers.

MDR is broadly the user charge a merchant has to pay to the bank for using card transaction services. Banks are allowed to charge MDR of 0.25 % on transactions up to ₹ 1,000 and a maximum of 0.5 % on transactions between ₹ 1,000 and ₹ 2,000. Transactions over and above this would attract MDR of 1 %.

With the traders unwilling to remit MDR to banks, the burden is being passed on the consumers and this is said to have turned into a deterrent for consumers to opt for digital payments. The issue, according to officials, was not so much with organised sector, but the problem comes with small time dealers who continue to pass MDR on to consumers. “We have been telling them (small traders) that MDR should be absorbed by the respective dealers and it should not be passed on to consumers,” Finance Secretary Sandeep Kumar Sultania said.

“The issue had been represented to the Central Government more than once. People are discouraged because of the MDR. The issue is under the purview of the Prime Minister and the Niti Ayog is already examining the issue,” he said. The Union Department of Financial Services is seriously examining the matter and the Government is hopeful that the Centre would take a decision on the issue soon.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.