The Reserve Bank of India on Thursday said it will reimburse banks the merchant discount rate (MDR) charges on debit cards used for paying the government tax and non-tax dues of up to ₹1 lakh with effect from January 1, 2017.
This move follows the government’s decision to absorb the MDR charges in respect of debit card transactions while making payments to it.
MDR is the commission charged by the acquirer (the bank that provides the infrastructure to the merchant to accept payments and facilitates acceptance payments via cards) to the merchant.
On December 15, 2016, the Office of the Controller General of Accounts had said that MDR charges for debit card payments (for tax, non-tax and other payments to the Government of India) up to ₹1 lakh will be absorbed by the government. The RBI said agency banks should forward their claim for reimbursement of MDR along with statutory auditor’s certificate, as in the case of agency commission claims, to its Central Accounts Section (CAS) Nagpur, on quarterly basis.