To push more people towards Digital Payments, Reserve Bank of India reduces debit card transaction charges and has also issued another notification that all participating banks and Prepaid Payment Instrument (PPI) should not ask customers for any charges upto 1000 transaction, which will make through the Immediate Payment Service (IMPS), USSD-based *99# and Unified Payment Interface (UPI) systems.
This decision will applicable from January 1, 2017 to March 31, 2017. The Indian Government has took this consultation from various stakeholders to incentivise greater adoption of digital payments by large sections of the society. RBI will make smoother review of the charges in the intervening period. For easy banking access, Indian Government has also introduced *99# Mobile Banking which works without internet.
In another notification, RBI has reduced the Merchant Discount Rates (MDR) structure for debit card transactions. This step has also taken by RBI so that people can use debit card for more digital transactions. The Government of India (GoI) wants to make habit of Digital Payments to people. Till now, maximum people are using debit card only for withdrawing money from ATM. They are not habitual with debit card payments. The new MDR should be:
- For transactions upto 1000/-, MDR shall be capped at 0.25% of the transaction value (earlier the charges were 0.75%).
- For transactions above 1000/- and upto 2000/-, MDR shall be capped at 0.5% of the transaction value (earlier the charges were 1%).
This decision will applicable from January 1, 2017 to March 31, 2017 and shall not apply to ATM transactions. RBI will review the framework for charges for electronic payment transactions in the intervening period.