Reserve Bank of India, has revised the merchant discount rate (MDR) from January 2018, which could compel the retailers to go for cash transactions. The details are:
- MDR will be 0.4 per cent of the purchase value or Rs. 200 whichever is lower for shops which generate revenue up to Rs. 20 lacs.
- For stores who come above this bracket, MDR will be at 0.9 per cent or Rs. 1000 whichever is lower.
At present, the MDR is 0.25 per cent for purchases below Rs. 1000 and 0.5 per cent for those between Rs. 1000 and Rs. 2000. Further the statement adds that any merchant whose turnover is over Rs. 20 lac will be squeezed. This means many of the Kirana Shops have a turnover of more than Rs. 20 lacs who keep a margin of 3 to 4 per cent. They would obviously hesitate to pay 0.9 per cent as debit card charges. This inturn means that the cash transactions will go high.
Also it is learnt that this could affect every merchant, whether small or big. Inturn passing on the charges to the customers would obviously become a challenge.