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RBI/2017-18/105
DPSS.CO.PD No. 1633/02.14.003/2017-18
December
06, 2017
The Chairman and Managing
Director / Chief Executive Officers
All Scheduled Commercial Banks including RRBs / Urban Co-operative Banks /
State Co-operative Banks / District Central Co-operative Banks /
Payment Banks and Small Finance Banks /All Card Network Providers
Dear Madam / Sir,
Rationalisation of Merchant Discount
Rate (MDR) for Debit Card Transactions
Please refer to paragraph 1
of Statement on Developmental and Regulatory Policies regarding
revised framework for Merchant Discount Rate (MDR) for Debit Card
Transactions announced in the Fifth Bi-monthly Monetary Policy Statement,
2017-18 by the Reserve Bank of India.
2. The Reserve Bank had
specified the maximum MDR applicable to debit card transactions vide
its circular DPSS.CO.PD.No.2361/02.14.003/2011-12 dated June 28, 2012,
which was revised vide circular DPSS.CO.PD.No.1515/02.14.003/2016-17
dated December 16, 2016.
3. Based on consultations with
stakeholders on the “Draft Circular - Rationalisation of Merchant Discount
Rate (MDR) for Debit Card Transactions”, as also taking into account the
twin objectives of promoting debit card acceptance by a wider set of
merchants, especially small merchants, and ensuring sustainability of the
business for the entities involved, it has been decided to rationalise the
MDR for debit cards based on the following criteria:
a.
Categorisation
of merchants on the basis of turnover.
b.
Adoption
of a differentiated MDR for QR-code based transactions.
c.
Specifying
a ceiling on the maximum permissible MDR for both ‘card present’ and ‘card
not present’ transactions.
4. Accordingly, the maximum MDR
for debit card transactions shall be as under:
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Sr.
No
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Merchant
Category
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Merchant
Discount Rate (MDR) for debit card transactions
(as a % of transaction value)
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Physical
POS infrastructure including online card transactions
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QR
code-based card acceptance infrastructure
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1.
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Small merchants
(with turnover upto ? 20 lakh during the previous financial year)
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Not exceeding 0.40%
(MDR cap of ? 200 per transaction)
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Not exceeding 0.30%
(MDR cap of ? 200 per transaction)
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2.
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Other merchants
(with turnover above ? 20 lakh during the previous financial year)
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Not exceeding 0.90%
(MDR cap of ? 1000 per transaction)
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Not exceeding 0.80%
(MDR cap of ? 1000 per transaction)
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5. A reference is invited to
our circulars DPSS.CO.PD. No. 639/02.14.003/2016-17 dated September 1,
2016 on unbundling of MDR and DPSS.CO.PD.No.
2894/02.14.003/2015-2016 dated May 26, 2016 on putting in place a
Board approved policy for merchant acquisition. It is reiterated that the
banks and authorised card payment networks shall strictly adhere to the
above directions. Further, banks shall ensure that the MDR levied on the
merchant shall not exceed the cap rates as prescribed above, irrespective
of the entity which is deploying the card acceptance infrastructure at the
merchant location.
6. Banks are also advised to
ensure that merchants on-boarded by them do not pass on MDR charges to
customers while accepting payments through debit cards.
7. The above instructions shall
be effective from January 1,
2018. These instructions are subject
to review.
8. The directive is issued under
Section 10(2) read with Section 18 of Payment and Settlement Systems Act
2007, (Act 51 of 2007).
Yours faithfully
(Nanda S. Dave)
Chief General Manager-in-charge
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