No Transaction Charges on Digital Payments Up to Rs 2000 For Next 2 Years, Cabinet Approves Proposal

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No Transaction Charges on Digital Payments Up to Rs 2000 For Next 2 Years, Cabinet Approves Proposal

New Delhi, Dec 15: The Narendra Modi Government on Friday approved a proposal to do away with bank transaction charges over digital payments of up to Rs 2000. “Merchant Discount Rate (MDR) applicable on all debit card/BHIM UPI/ AePS transactions up to and including a value of Rs 2000 to be borne by Government for […]

New Delhi, Dec 15: The Narendra Modi Government on Friday approved a proposal to do away with bank transaction charges over digital payments of up to Rs 2000.

“Merchant Discount Rate (MDR) applicable on all debit card/BHIM UPI/ AePS transactions up to and including a value of Rs 2000 to be borne by Government for 2 years with effect from 1 January, 2018 by reimbursing same to the banks,” Union Law Minister Ravi Shankar Prasad told the media in New Delhi.

“The monetary value of digital transactions during April – September 2017 was worth 2.18 lakh crores,” Prasad added.  He said that the rollout of GST will play a strong role in strengthening the digital ecosystem of the country.

The Reserve Bank in 2012 had capped the MDR for debit card transaction at 0.75 per cent for transaction values up to Rs 2,000 and at 1 per cent for transaction values above Rs 2,000. However, there is no RBI cap on MDR on credit card payments.

In order to move towards ‘less-cash’ society by developing a card acceptance infrastructure, the RBI had in March came out with a concept paper to encourage card transactions and sought public opinion.

As of October 2015, there were 61.5 crore debit card users and 2.3 crore credit card holders in the country.