To augment payment through digital route, Centre has now been seen to ask the apex bank to increase the MDR for a merchant. MDR or Merchant discount rate is the amount the merchant is required to shell out to the banks for availing card services. The rationale given is that the amount lost as MDR would then by compensated by the digital payments as the latter is expected to witness a surge.
The current MDR charges are based on transaction value whereas the draft guidelines require these charges to be rationalized based on the merchant's turnover instead of the transaction costs. Bankers are also favouring the call put forward but RBI is still to notify changes in the MDR charges.
Also, the draft guidelines put forth by the RBI, merchants using physical PoS and digital PoS will need to shell out a maximum of 0.4% and 0.3% per transaction; if their annual turnover is less than Rs. 20 lakh, Others will have to pay 0.95% and 0.85% respectively. For government transactions also MDR rates have been stipulated.