The Reserve Bank of India announced that banks will not face any Merchant Discount Rate charges on payments made to the Government of India. The regulator will also reimburse banks the MDR on all debit cards used to pay tax or non-tax dues to the government.
“The Government of India has decided to absorb the Merchant Discount Rate charges in respect of debit card transactions while making payments to GoI,” the RBI said in a notification.
Under the new rule MDR charges on debit cards payments of up to Rs 1 lakh will be absorbed by the government. The agency banks who receive payments made to government of India will submit claims of applicable MDR charges to RBI periodically.