Important Facts For Prelims
Merchant Discount Rate
- 31 Dec 2019
- 1 min read
Why in News
From 1st January, 2020, businesses with an annual turnover of more than ₹50 crore will have to offer low cost digital payment options to customers and Merchant Discount Rate (MDR) will not be levied on either customers or merchants.
- Low cost digital payment modes will include options such as BHIM UPI, UPI QR Code, Aadhaar Pay, Debit Cards, NEFT, RTGS, among others.
- The move is expected to boost payments via home-grown real-time payments system Unified Payments interface (UPI) at merchant locations, along with RuPay debit cards.
- MDR is the cost paid by a merchant to a bank for accepting payment from their customers via digital means. The merchant discount rate is expressed in percentage of the transaction amount.
- Presently, it is applicable for online transactions and QR-based transactions.
- The amount that the merchant pays for every transaction gets distributed among three stakeholders--the bank that enables the transaction, vendor that installs the point of sale (PoS) machine and the card network provider such as Visa, MasterCard, RuPay.
