Zero MDR

Subject: Economy

Context:

Government’s waiver of Merchant discount rate (MDR) on certain payments will hamper payment innovations and growth says RBI constituted the Committee under the Chairmanship of D.B. Phatak.

Concept:

• MDR is a fee charged from a merchant by a bank for accepting payments from customers through credit and debit cards in their establishments.
• MDR compensates the card issuing bank, the lender which puts the Point of Sale terminal and payment gateways such as Mastercard or Visa for their services.
• MDR charges are usually shared in pre-agreed proportion between the bank and a merchant and are expressed in percentage of transaction amount.