Govt allocates Rs 200 cr for reimbursement of MDR charges

Government has earmarked Rs 200 crore for 2017-18 towards reimbursement of MDR charges on payments of government dues of up to Rs 1 lakh by debit cards, a move to promote digital transactions.
The fund allocated by Finance Minister Arun Jaitley towards reimbursement of MDR charges for the next fiscal is four times the amounted expected to be released this fiscal.
As per an official document, the allocation for making payment to RBI towards reimbursement of Merchant Discount Rates (MDR) charges for 2017-18 is Rs 200 crore. It is estimated at Rs 50 crore this fiscal.
Post-demonetisation, the Finance Ministry had announced that MDR charges will be absorbed by the government for payments of tax, non-tax and other payments to the government by citizens using debit cards.

The banks receiving Government of India dues, like tax revenue and other receipts through debit cards would submit the claims of MDR charges to RBI periodically.
The Reserve Bank of India will reimburse banks' claims of MDR charges on government receipt transactions through credit to the bank and debit the government as per the budget provision.

After scrapping higher denomination of currency notes, the government has taken slew of measures to promote digital transaction, including a reward scheme.
Under the Niti Aayog's incentive schemes, rewards to the tune of Rs 117 crore has been given to 7.6 lakh merchants and consumers.

MDR is a fee charged by banks from a merchant for providing debit and credit card services.