The Reserve Bank of India proposed changes to the rules governing how much banks charge merchants for debit card transactions in order to foster more transactions among smaller merchants.
The central bank said in draft rules released Feb. 16 that it proposed to link the merchant discount rate to the annual revenue of the merchant, as opposed to a current flat rate charged on all transactions.
The central bank proposed to create four different classes of merchants based on their turnover rates. Small merchants with annual turnover of less than 2 million Indian rupees and those under a special category will be charged a discount rate of up to 0.4% on physical transactions and 0.3% on digital transactions.
All other category of merchants with annual transactions over 2 million rupees will be charged a discount rate of up to 0.95% for physical transactions and 0.85% for online transactions.
For government transactions, the RBI proposed a flat fee of 5 rupees for transactions valued at 1 rupee to 1,000 rupees. Transactions worth 1,001 rupees to 2,000 rupees will be charged 10 rupees. Transactions above 2,001 rupees will be charged with a 0.5% merchant discount rate.
As of Feb. 16, US$1 was equivalent to 67.04 Indian rupees.