New Delhi: The Reserve Bank of India (RBI) has said that its decision to cap the fee that banks charge the merchants for transactions using debit cards at up to 1% of the value of the purchase will now be effective from September 1, 2012, instead of July 1, on account of some operational glitches.
MDR is the fees charged by banks (or the issuer of debit card) from a businessman for accepting payment through debit or credit cards from their customers.
"We have received several representations from banks and system providers that implementation of the directive needs to be preceded by modifications in the computer systems and agreements with merchants," RBI said in a notification issued late Wednesday evening.
"In view of the operational difficulties...it has been decided to allow extension of time till end of August, 2012 to comply with the directions on merchant discount rates," the central bank said.
Earlier last week, the RBI had directed not to charge more than 0.75% for debit card purchases up to Rs 2,000. For purchases over Rs 2,000, the MDR was capped at 1%. These rates had to come into effect from July 1, 2012.
Currently MDR fee is between 2% and 3% of the total purchase.
As per the RBI, the move was taken to encourage all categories and types of merchants to implement the debit card acceptance infrastructure and also facilitate acceptance of small value transactions.
Since credit card transactions carry a higher risk, "it is necessary to encourage the use of debit cards", the RBI had said.
Until now, the MDR on debit and credit cards has been similar in the country.
Given the different nature of the two, a similar MDR can't be charged on credit and debit card transactions, it had said.