RBI easing cost burden for online transactions; debut card user major beneficiary

The Reserve Bank of India is planning to reduce the costs of small online transactions to push the Government Of India’s digital or cashless push. It has decided to slash merchant discount rate (MDR) charges on payments made through debit cards, and cap it at 0.25% for transactions upto INR1000 (earlier 1%), and at 0.5% for transactions between INR1000-2000 (earlier 0.75%). RBI is also planning to do away with levies on small transactions through mobile phones. The implementation for both the proposals is expected to start from 1st Jan’17 till 31st March’17.

The relaxations are in sync with the Government of India’s initiatives to incentivize greater adoption of digital payments by larger section of the society. Majority of the banks (SBI, ICICI, Axis, Yes) have already waived the MDR charges on debit card transactions till 31st Dec’16.

With service tax on online transactions for train tickets and others already waived, many other steps are being taken by the government to make other debit/credit card transactions cheaper.