| Abstract |
To promote small ticket debit card merchant transactions up to Rs 2000, the government during the calendar years 2018 and 2019 made merchant discount rate (MDR) zero for the merchants, and provided banks a monetary support, towards MDR, @ 0.4%. In contrast, effective January 1, 2020, the government made MDR zero for every transaction using RuPay debit cards alone. Neither merchants nor the government paid the banks any MDR for such merchant transactions. However, banks were allowed to impose MDR onto the merchants for every transaction using mastercard/VISA debit cards. Using debit card and ATM data, this paper provides some policy guidance towards MDR. |
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