Trade & consumers want MDR free digital payments: CAIT

12 Dec '17
2 min read

Transaction charges like the merchant discount rate (MDR) applicable on debit card transactions are major deterrent in adoption and acceptance of digital payments in the country, the Confederation of All India Traders (CAIT) has said. If digital payment is encouraged without any MDR then more and more people would prefer to use digital payments.

“MDR is s complex issue as far as digital payments are concerned in India. Whether a lower or higher MDR ultimately it is an extra financial burden on either the merchant or consumer. Since cash is available and without any surcharge both merchant and consumers do not want to pay any charges while exchanging payments,” CAIT said in a press release.

It is estimated that government spends about 25,000 crore rupees annually on printing of currency and about 6,000 crore rupees on security, logistics etc of the currency. “If digital payment is intensified with no MDR, the cost of printing currency will come down and on the other hand banks will also invest less amount in transportation of currency for ATM filling and for other purposes. It will be a win-win situation for everyone,” CAIT said.

CAIT suggested that the government should subsidise MDR directly to the banks and thus protect both merchants and consumers from burden of MDR. It also suggested constitution of a separate body for RuPay, and making NPCI an independent regulator.

“The government should also constitute a Digital Payments Monitoring Board to monitor digital payment landscape in the country. Equal opportunity should be given to all technology providers to leverage Digital Payments in India to the best of their ability and resources,” the traders body suggested.

“Merely playing with MDR is a futile exercise and we want a MDR free digital payment society else cash is the available resource for meeting the transactions,” it added.

Last week, the Reserve Bank of India (RBI) lowered MDR to 0.4 per cent for businesses with turnover of less than Rs 20 lakh. For businesses over Rs 20 lakh, MDR is capped at 0.9 per cent. While the revised norms augur well for consumers as they will have to pay less on card payments, for merchants it means increased costs of operation. (RKS)

Fibre2Fashion News Desk – India

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