Merchant Discount Rate charges on transactions upto Rs 2000 borne by Govt

New Delhi Dec 15: In order to promote digital transactions the government has decided to remove merchant discount rate charges on transactions upto Rs 2000 made through debit cards, BHIM UPI or Aadhaar enabled payment.

The charges will be borne by the government and the move was announced by IT minister Ravi Shankar Prasad on Friday.

The merchant discount rate (MDR) will be borne by the government for two years with effect from January 1, 2018 by reimbursing the same to the banks.

The move will have an impact of Rs 2,512 crore on the exchequer. The decision was taken at the Cabinet meeting chaired by Prime Minister Narendra Modi, Prasad said.

"For all the transactions less than Rs 2,000 in value, the consumer and the merchant will not suffer any additional burden in the form of MDR," the minister said, adding this will lead to greater adoption of digital payment modes for such transactions.

IT minister also added that such transactions are major percentage in total transactions done and this decision will help society to move more towards cashless transactions.