The government has decided to absorb the Merchant Discount Rate (MDR) charges in respect of debit card transactions while making payments to the Government of India.
For operationalising this, Reserve Bank of India (RBI) will reimburse banks the MDR on debit cards used for payment of tax and non-tax dues to the Government of India with effect from January 1, 2017.
MDR is the rate charged by banks to merchants for providing debit and credit card services.
RBI has asked agency banks to forward their claim for reimbursement of MDR. The first such claim may be made by April 30, 2017 for the quarter ending March 31, 2017. This is an initiative to go cashless.