Indian government is trying to encourage small shopkeepers to accept electronic payments, by bearing the merchant charges, that one needs to pay to the banks, on purchases of up to Rs 2,000 starting January 1, 2018.
The subsidy will be provided to the small shop owners who now need to pay a fees to the banks for transactions through Debit cards, BHIM or Aadhaar. In India, where the average debit transaction value is just Rs 1,500, accepting debit cards for payments will become as cheap as accepting cards for small merchants.
This news was announced by IT minister Ravi Shankar Prasad, saying that government is implementing measures to accelerate digital payments in the country. Also a committee of secretaries has been set-up to ensure that no misuse of subsidy occurs and that benefits are passed on to the users.
Last week the Reserve Bank of India had announced a revised MDR of 0.9% for large merchants and 0.4% for those with a turnover of below Rs 20 lakh per year.
While the charges for debit cards have been waived, payments by credit card will continue to attract MDR.
“Credit cards are largely used for payments in big retail outlets. The customer base in smaller shops are the ones that largely use debit cards,” said Manju Agarwal, deputy managing director, State Bank of India
(With inputs from India Times)