The Finance Ministry said on Wednesday that it will discuss with the Reserve Bank of India on the issue of merchant discount rate (MDR) so that it can be worked on the system of reducing it. The central bank recently increased the rate from 0.25 percent of the deal value to 0.90 percent.
According to the Ministry, the increase in the said charges can have an adverse impact on the digital India campaign, hence the issue needs to be considered, according to senior officials of the EPFO Ministry. At the same time, the central bank has made it clear that he did the decision about MDR after discussions with all stakeholders.
"Most merchants will be discouraged to use POS machines, especially small merchants who do not get input tax credit in GST. This will discourage them from using POS machines," the official said. MDR is the rate charged to a merchant by a bank for providing debit and credit card services. There are nearly 27-28 crore transactions per month on Point of Sale (POS) machines with an average size of Rs 1,500.
Last year after demonetization, the RBI as a special measure had capped the MDR at 0.25 percent of the transaction value for transactions of up to Rs 1,000 and 0.5 percent for those above Rs 1,000 and up to Rs 2,000.