UT mulls waiving transaction fee on debit card payments

Ramkrishan Upadhyay

Tribune News Service

Chandigarh, February 21

In a major relief to residents, the UT Administration is considering waiving the merchant discount rate (MDR) or transaction fee charged on debit card payments by banks following directions from the Finance Ministry.

The decision of the banks to charge the MDR has badly hit the drive of the Administration to make Chandigarh cashless as most departments have either stopped receiving the payments through swipe cards machines or are asking the users to pay the transaction charges.

Sources in the Administration said the Finance Ministry had sent a communication stating that “government departments shall take appropriate steps to bear the MDR or transaction fee charged on debit card payments by banks like other merchants. The public shall not bear the MDR cost for making payments to the government through debit cards/credit cards and other digital means.”

An officer of the Administration said the proposal  to waive the  MDR  in view of the directions from the ministry was being put up before the  higher authorities for approval. He said after getting the approval, directions would be issued to the departments in this regard.   

The  stand-off  between the  banks  and the Administration  over the  MDR has been causing harassment to the public. People  visiting various departments are  not able to  make  payments   through the digital mode. The  RLA stopped receiving payments through machines  after December 31, 2016. Some departments are using POS machines, but are asking residents  to pay  the MDR.    

The MDR is the commission paid by the merchant to the bank concerned for every transaction conducted on a POS machine installed by the bank. Since 2012, the Reserve Bank of India has capped the MDR for debit card transactions up to Rs 2,000 at 0.75 per cent and at 1 per cent for all transactions above Rs 2,000.