Retailers hail government move to subsidise MDR

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NEW DELHI: Both large and small retailers have welcomed the government’s decision to subsidize the commercial discount rate (MDR) that would otherwise have cushioned its revenues, since most retailers had to spend more commissions on banks and card issuers in January. facilitating transactions using debit cards.

On Friday, the government said it would reimburse the banks for two years for the MDR in transactions made through debit cards, BHIM or payment systems enabled by Aadhaar up to 2,000 rupees in an offer to encourage digital payments of the consumers.

“That means zero MDR for retailers for transactions up to Rs 2,000 and it will help us immensely,” said Kumar Rajagopalan, executive director of the Indian Retailers Association. “This helps all kinds of retailers, small or large, this is a big guarantee from the Ministry of Finance on digital India.”

For example, Rajagopalan said that more than 50% of the size of the tickets in supermarkets and hypermarkets in India are below Rs 2,000 and said that the ticket size of approximately Rs 2,000 is even higher in terms of percentage in stores of kirana. The government’s decision comes shortly after the Reserve Bank of India reviewed the MDR and that was criticized by retailers in general.
Last week, RBI told MDR at stores with annual revenues of up to Rs 20 lakh, MDR will be 0.4% of purchase value or Rs 200, whichever is lower. In larger stores, MDR will be 0.9% of the purchase value or Rs 1,000, whichever is less.

Currently, MDR is 0.25% for purchases below Rs 1,000 and 0.5% for those between Rs 1,000 and Rs 2,000, while for amounts higher than that it is 0.5%, regardless of annual income.