The RBI has cut the rate of commission that customers pay to merchants at the point of sale for payments made through debit cards to between 0.75 % and 1 %.
Currently, both debit and credit card have the same rate of commission ranging between 2 % and 3 %.
As per the new RBI directive, the commission known as merchant discount rate (MDR), will not be more than 0.75 % of transactions of up to Rs 2,000. For transactions above Rs 2,000, MDR has been capped at one %, as per the new rules that will be applicable from July 1.
In a statement, RBI said the MDR for debit and credit cards has been similar in India. While debit card is used as per the availability of funds, credit card usage is linked to the credit limit sanctioned by the issuer.
“Thus given the different nature of the two products, there is no rationale for having a similar MDR for debit and credit cards. Further, it is observed that debit cards are mostly being used for withdrawal of cash at ATMs,” the RBI said.
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