Mumbai IIT suggests fixing MDR limit to promote digital transactions

Mumbai: Indian Institute of Technology (IIT) Mumbai has made a suggestion to the government to fix the limit of Merchant Discount Rate (MDR) charge on all types of debit and prepaid cards in order to promote digital transactions.

MDR is the amount that a bank charges from any shopkeeper or businessman for card payment made by the customer. The fixation of these charges may be implemented later but what matters now is how it affects the customers.

Most businessmen, traders are putting the burden of MDR charges on the customers and try to pay bank fee from the pockets of customers. The recommendation states that the MDR on the debit card needs to be limited to 0.6 per cent of the transaction value. The upper limit should be fixed at Rs 150 for MDR at a fixed rate of 0.6 per cent.

According to the suggestion, for small and medium scale businesses and merchants accepting Point of Sale (POS) based payments and where the annual turnover is up to Rs 2 crore, the MDR limit can be increased to 0.25 per cent for transactions up to Rs 2,000, while for transactions above Rs 2,000 this limit can be up to 0.6 per cent. The proposed limit of debit card MDR for businesses with annual turnover of Rs 20 lakh or more is 0.9 per cent of the transaction value, which can be up to a maximum of Rs 1,000.

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