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From 2018, No More Bank Transaction Charges on Digital Payments Upto ₹2000!

MDR is the rate that banks levy from merchants for the provision of debit and credit card services when payment is made at a merchant point of sale (PoS).

From 2018, No More Bank Transaction Charges on Digital Payments Upto ₹2000!

Tired of paying bank transaction charges for every single digital payment?

Well, the government has given the green signal for a proposal, under which you will not be charged for BHIM, UPI, and debit card transactions up to ₹2000.

“Merchant Discount Rate (MDR) applicable on all debit card/BHIM UPI/ AePS transactions up to and including a value of ₹2000 to be borne by Government for two years with effect from 1 January, 2018 by reimbursing same to the banks,” Union Law Minister Ravi Shankar Prasad said, reports India.com.

MDR is the rate that banks levy from merchants for the provision of debit and credit card services when payment is made at a merchant point of sale (PoS).

For representative purposes. Source: Pixabay.

However, the rate is often charged from the customers by merchants, who cite lesser margins, due to which the former prefer paying in cash despite having debit cards.

In 2012, RBI had fixed the MDR for debit card transaction at 0.75 percent for transaction values up to ₹2,000 and at 1 percent for transaction values above ₹2,000.


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According to Money Control, a committee comprising Secretary Department of Financial Services, Secretary Ministry of Electronics & IT and the CEO, National Payment Corporation of India (NPCI), would be deployed to look into the industry cost structure of such transactions that will help in forming the basis of determining the levels of reimbursement.

With this move, the consumers and merchants will no longer have to bear the burden of MDR at least for the next two years as long as the transactions remain under the ₹2000 slab, thus paving the way for an infrastructure that has greater card-acceptance, and a cashless economy.

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