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Hike in MDR: RBI Defends Move, Says Important to Banks

December 18, 2017

Hike in MDR: RBI Defends Move, Says Important to Banks

As business owners criticized the recent decision of the Reserve Bank of India (RBI) to increase the Merchant Discount Rate (MDR), the central bank said that at present, the banks lose money in the acquiring of businesses (getting merchants to start using their PoS machines). Thus, the hike in the rate is meant to make the business viable for them and at the same time help promote digital payments.

The RBI has revised the MDR rate to 0.9% for businesses that have an annual turnover above Rs. 20 lakh. Earlier, it was 0.25% for transactions below Rs. 1,000, and 0.5% for those ranging between Rs. 1,000-2,000.

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