the rbi on thursday proposed to drastically cut merchant discount rate mdr charges on debit card payments from april 1 with a view to maintain momentum of digital transactions post demonetisation especially among small merchants for small merchants with annual turnover of rs 20 lakh and special category merchants like utilities insurance mutual funds educational institutions and government hospitals the mdr charge has been proposed at 040 of the transaction value the mdr charge would be even less at 03 if the transaction is through digital point of sale pos qr code the rbi said in a draft circular on rationalisation of mdr for debit card transactions the existing mdr is capped at 075 for transactions up to rs 2000 and 1 for over rs 2000 however there is no rbi cap on mdr on credit card payments postdemonetisation the rbi has reduced the charge till march 31 the new charges as per the rbi draft would come into effect from april 1 the draft also proposes that banks will ensure that all merchants display the signage no convenience or service charge is payable by customers recent developments including the commitment to greater adoption of digital payments by the government have given a big boost to migration to noncash forms of payments there has been an increase in card transactions other than at atms and the momentum has to be maintained especially amongst small merchants who have just begun to accept digital payments the rbi said while seeking comments on the draft till an end of this month