With the ongoing demonetisation drive causing serious cash crunch in the economy, the Reserve Bank of India has announced special measures, including reducing the commission charged by banks to merchant outlets on customer transactions using debit cards.

The central bank has also reduced customer charges for Immediate Payment Service (IMPS), Unstructured Supplementary Service (USSD)-based and Unified Payment Interface (UPI) systems. It said these measures are valid from January 1, 2017 to March 31, 2017.

In order to facilitate wider acceptance of card payments, the RBI said that for transactions up to ₹1,000, the merchant discount rate (MDR) will be capped at 0.25 per cent of the transaction value.

For transactions above ₹1,000 and up to ₹2,000, the MDR will be capped at 0.5 per cent of the transaction value.

The central bank said these measures will not apply to ATM transactions.

MDR is the commission charged by the bank that provides the necessary infrastructure to the merchant to accept payments using cards.

Currently, banks are required to cap the MDR for debit card transactions at not exceeding 0.75 per cent of the transaction amount for value up to ₹2,000 and not exceeding 1 per cent for transaction amount for value above ₹2,000. To incentivise greater adoption of digital payments by large sections of society, the central bank said all participating banks and prepaid payment instrument (PPI) issuers will not levy any charges on customers for transactions up to ₹1,000 settled on the IMPS, USSD-based and UPI systems.

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