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MDR reimbursement pending from banks

MDR reimbursement pending from banks

News

  1. The Payments Council of India (PCI) has said that reimbursement of merchant discount rates from banks to service providers and merchant aggregators are yet to be received.

What is Merchant Discount Rate (MDR)?

  1. MDR is the fee that a merchant has to pay to a bank for every transaction that is split between the bank which issued the card, the payment service providers, and payment gateways (PaUbiz and PayUMoney)
  • Payment Service ProviderA payment service provider (PSP) offers online services for accepting credit card, debit card, online banking payments
  1. In December 2017, the Ministry of Electronics and Information Technology, had said that MDR would be reimbursed by the government on transactions up to Rs.2000.
  2. It is applicable on transactions made through debit cards, BHIM UPI or Aadhaar enabled payment systems.

Payment Council of India

  • PCI is an apex non-governmental body representing companies in payments and settlement system.
  • It was formed in 2013 under aegis of IAMAI (Internet and Mobile Association of India) to cater needs of digital payment industry in India

Impact of the move

  • Ambiguity over reimbursement will impact the operating ability of merchant aggregators
  • Erode the efforts to promote digital payments
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