Chief Ministers Led By Chandrababu Naidu Urges RBI To Cut In Card Transaction Charges
By Vamsi Krishna N : 22-Dec-2016
The high profile committee of Chief Ministers which has been formed to find ways to boost digital payments, has today urged the central bank to cut down the card transaction charges, as a measure to motivate Indian consumers to start using digital payment methods instead of cash.
The proposal made by the Chandrababu Naidu led, high profile committee of Chief Ministers, has been forwarded to the central bank by the Nithi Ayog.
In his note written to the RBI Governor, Urjit Patel, Niti Ayog, CEO, Amitabh Kanth has mentioned that, “The chief ministers’ committee is in agreement that on account of the massive push towards a digital economy, financial transactions are moving from an era of low volume, high value to an era of high volume, low value.”
The high profile committee of CMs have also suggested central bank that, the merchant deposit rate (MDR) to be slashed down to 30 paise for transactions worth up to Rs. 100 and charge a maximum of Rs. 10 for transactions worth above Rs. 2000, in order to encourage Indian consumers to use digital payments using debit and credit cards.
The note also said, “On account of this transition, transaction fee or MDR has to be substantially lower. Volume growths will more than make up for lower transaction fees, since the marginal cost of transaction is very low.”
Hence, it is estimated that the rise in volume would lead to a fourfold rise in the revenue generated through MDR charge.
The other proposals made by Nilekani to the central bank include, 0.5% of MDR on transactions below Rs. 100 and a maximum of Rs. 10 on higher transactions that are made through cards and point of sale machines. Other proposals are 0.3% MDR or Rs. 6 for transactions made through unified payment interface (UPI), and 0.5 to 1% on transactions made at micro-ATMs.