Merchant Discount Rates | Latest Guidelines and Implications for Businesses l Jaagruk Bharat
Updated: 17-04-2025 at 8:30 AM
1k
The growth of cashless payments in India through channels like debit and credit cards, UPIs, and mobile wallets is driving greater financial inclusion. Digital transactions enable purchasing convenience while powering small businesses with instant settlements and improved cash flows.
However, many citizens complain of merchants forcing them to pay additional percentage fees on card payments, though RBI guidelines explicitly prohibit this practice. Lack of awareness enables vendors to blatantly disregard rules and continue illegally extracting charges as high as 2-3% of transaction value from customers.
Let’s understand the relevant RBI guidelines regarding POS charges and how to tackle overcharging.
Read more: Ayushman Card
RBI Rules On Merchant Discount Rates
The merchant discount rate (MDR) is the fee paid by merchants to banks for accepting payments from customers via credit or debit cards or prepaid payment instruments.
As per RBI norms, merchants cannot:
- charge any additional fee from customers for card payments.
- Require minimum transaction amounts for accepting card payments.
- Refuse card payments for lower ticket-size purchases.
The costs related to card processing are completely to be taken up by the merchant and their bank. Customers face no charges apart from applicable taxes.
This policy aims to promote cashless customer convenience and standardise payment acceptance infrastructure across India.
Read more: eShram Card
Common Tricks Adopted By Merchants To Collect Charges
Despite strict RBI guidelines, merchants come up with innovative ways to recover their MDR costs from customers:
- Explicitly asking for 2% fees on card payments.
- Forcing the purchase of coupons for an amount higher than the bill value.
- There are two different price lists, one higher for card payments.
- Mandating card payment only above a certain bill amount.
- Refusing cards for low-ticket transactions.
These tactics allow shops and outlets to easily blend and pass off charges within transactions. Customers end up paying more for card payments, though RBI regulations prohibit this practice.
How To Tackle Overcharging By Merchants?
Here are some steps to counter additional charges demanded by sellers on card payments:
1. Politely inform about RBI Rules: Educate vendors that charging customers is illegal. If done respectfully, some revert to such demands.
2. Pay Only Listed Rates: Clearly state that you will pay only the officially displayed rates via any mode. Additional fees cannot be charged to the customer.
3. Cancel Transaction: Walk out, refusing service if forced to pay more for cards. This draws the attention of other customers, cornering sellers to reconsider policies.
4. Demand Bill Breakup: Ask vendors to provide a proper bill breakup clearly mentioning all of the applied charges. This creates transparency, exposing misleading claims.
5. Threaten Reporting: Warn misbehaving merchants about complaining to their head office or the RBI officials. Fear of suspended licenses often helps halt such offenders.
6. Leave Negative Reviews: Spread awareness through word-of-mouth and social media complaints against outlets charging illegal fees. This impacts brand image, driving policy changes.
7. File RBI Complaint: Last but not least, submit an official complaint to the banking regulator regarding additional charges imposed by merchants in violation of rules. Strict penalties often force refunds along with compliance.
Read more: Death Certificate
Way Forward
By taking such apt and strong measures and standing your ground against these merchants and banks by staying educated, you can be the push towards change that will help inspire and vocalise other people as well.
With the help of social media, word of mouth, and various other ways of communicating, people can be made more aware of these ‘behind the scenes’ sorts of scams that even a person with a keen eye would overlook.
So, let us all stay educated to steer clear and help others steer clear of such dishonest acts.
For more information, visit the NPCI website.
Frequently Asked Questions
0
0
1k
0
0
1k Views
0
No comments available
Our Company
Home
About
T&C
Privacy Policy
Eula
Disclaimer Policy
Code of Ethics
Contact Us
Cancellation & Refund Policy
Categories
Women
Insurance
Finance
Tax
Travel
Transport & Infrastructure
Food
Entertainment
Communication
Government ID Cards
E-commerce
Traffic guidelines
Miscellaneous
Housing and Sanitation
Sports
Startup
Environment and Safety
Education
Agriculture
Social cause
Disclaimer: Jaagruk Bharat is a private organization offering support for documentation and government scheme access. We are not affiliated with any government body. Official services are available on respective government portals. Our goal is to make processes easier and more accessible for citizens.
Jaagruk Bharat with its team work tirelessly to bring all government schemes, Sarkari Yojanas, policies and guidelines to you in a simplified and structured format.
Our team is at the forefront of gathering, verifying and breaking all central government and state government regulations uncomplicatedly.
Our mission and vision are to make the common citizen of India aware of all government-laid-out rules and policies in a single place. Thus, we Jagruk Bharat have created an all-inclusive portal for 1.5 billion Indian citizens to understand, utilize and avail benefits of govt schemes and policies and by bringing them under one roof.
Jaagruk Bharat (जागरूक भारत) is a one stop centralised destination where you can effortlessly find, understand, and apply for various government schemes. We are committed to ensuring transparency and empowering Indian citizens. Our goal is to keep India Jagruk about government policies, the latest news, updates, and opportunities.
All Copyrights are reserved by Jaagruk Bharat