What changed
Earlier, debit and credit cards had similar MDR. RBI now mandates a separate, lower MDR for debit cards: 0.75% for transactions up to Rs 2,000 and 1% for transactions above Rs 2,000. This directive is issued under the Payment and Settlement Systems Act, 2007.
What it means for you
Banks and acquirers must lower charges on debit card transactions, especially for small-value payments. The move is intended to encourage merchants, particularly smaller ones, to deploy card acceptance infrastructure and increase transaction volumes, ensuring a reasonable return on investment for acquirers through network effects.
What you must do
- Cap debit card MDR at 0.75% for transactions up to Rs 2,000 and 1% for transactions above Rs 2,000, effective July 1, 2012.
- Ensure compliance with the new MDR structure for all debit card transactions across your acquiring network.
- Communicate the revised MDR to merchants and update your payment systems accordingly.
- Acknowledge receipt of this directive to RBI as instructed.
Who it affects
All scheduled commercial banks including RRBs, Urban Co-operative Banks, State Co-operative Banks, District Central Co-operative Banks, Authorised Card Payment Networks, Merchants accepting debit card payments
What is the new MDR for debit card transactions?
For transactions up to Rs 2,000, MDR is capped at 0.75% of the transaction amount. For transactions above Rs 2,000, MDR is capped at 1%.
When does this new MDR structure take effect?
The directive is effective from July 1, 2012.
Why did RBI introduce a separate MDR for debit cards?
RBI noted that debit cards are secured products linked to account balances, unlike credit cards which carry credit risk. A lower MDR for debit cards is intended to encourage their use at smaller merchants and expand card acceptance infrastructure.