The country's largest lender State Bank of India has taken on private banks in the fight for market share in digital banking by waiving the merchant discount rate (MDR) for merchants with turnover of less than Rs20 lakh till 31 December 2017.
"State Bank of India has decided to waive completely the MDR charges on debit card transactions for all small merchants having annual turnover of up to Rs20 lakh, for a period of one year, ie, up to 31-12-2017,'' the bank said.
SBI also said that its latest move will help small merchants overcome apprehensions on joining this journey by installing of PoS terminals in their shops.
SBI's move is primarily targeted at smaller merchants who have not yet experienced the convenience of card payments. "The bank believes that this gesture would go a long way in changing the perception towards the cost of using digital channels and supplement the government's Cashless India Drive," SBI said.
Close to 70 per cent of SBI's point-of-sale terminals have been deployed in non-metro centres with more than 4,400 centres established so far.
According to Reserve Bank of India rules, normally debit card transactions of less than Rs1,000 attract an MDR of 25 basis points, transactions between Rs1,000 and Rs2,000 an MDR of 50 basis points and transactions above Rs2,000 an MDR of 1 per cent.