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RBI/2016-17/59
DPSS.CO.PD No.639/02.14.003/2016-17
September
1, 2016
All Scheduled Commercial Banks
including RRBs/ Co-operative Banks/
State Co-operative Banks/ Central Co-operative Banks/ Authorised Card
Payment Networks
Dear Madam / Sir,
Merchant Discount Rates (MDR)
structure – unbundling of charges
A reference is invited to our
circulars DPSS.CO.PD.No.2361/02.14.003/2011-12
dated June 28, 2012 and DPSS.CO.PD.No.27/02.14.003/2012-13 dated July 04, 2012 wherein
directions pertaining to merchant discount rates (MDR) for debit card
transactions were issued.
2. It has been brought to our
notice that in many instances charges for merchants are bundled and a
composite fee is levied on merchants irrespective of the type of card used.
This practice hinders adherence to the extant regulatory mandate. Further,
this not only disincentivises merchants from accepting cards but also gives
them scope to indiscriminately pass on the costs to the customers in the
form of surcharge.
3. In order to bring greater
transparency in MDR applicable at merchant level, it is advised that the
acquiring banks shall:
i) ensure that MDR are clearly
unbundled for different categories of cards;
ii) enter into separate
agreements or annexes within the same agreement for debit, credit and
prepaid cards so as to bring in more clarity and transparency; and
iii) educate the merchants
regarding the charges associated with different categories of cards, at the
time of acquisition.
4. This directive is issued
under Section 10(2) read with Section 18 of Payment and Settlement Systems
Act 2007 (Act 51 of 2007).
5. Please acknowledge receipt.
Yours faithfully
(Nanda S. Dave)
Chief General Manager
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