Credit card processing fees in India are composed of two main components: interchange fee and merchant discount rate (MDR). The interchange fee is the charge that is paid to the issuing bank, while the MDR is a cost paid by merchants for accepting credit and debit cards as payment.
Interchange fees vary based upon a variety of factors, including the type of card used, the merchant’s industry, and other factors. Generally speaking, interchange fees for domestic cards (issued by Indian banks) are lower than those for international cards (issued by foreign banks).
MDRs in India vary from 0.25% to 2%, depending on the type of transaction, with most transactions falling between 0.30% and 0.50%. Some merchants may be able to negotiate lower rates with card networks or their processing partners.
In addition to these two components, credit card processors may also charge additional fees for setup, maintenance, statement fees, and other services. There is usually a minimum fee that must be paid in order to establish a merchant account. Additionally, merchants may be charged additional fees for using certain payment gateways or other services.
Overall, credit card processing fees in India are generally lower than those in many other countries. This is due in part to the increased competition between banks and processors that has resulted from the emergence of digital payments and e-commerce. As the payments landscape continues to evolve, credit card processing fees are likely to remain competitive in India.
As of 2023-24, it is expected that credit card processing fees will remain steady in India. The development of digital payment systems and e-commerce will continue to drive competition between banks and merchants, which should keep prices low for customers. Additionally, the government has set limits on MDRs to ensure that merchants are not paying too much in fees.
What are the new RBI guidelines for credit card payment 2023-24 ?
In 2023-24, the Reserve Bank of India (RBI) introduced new guidelines for credit card payment processing that aim to reduce costs for both merchants and customers.
Under the new guidelines, interchange fees are limited to 0.5% of the transaction amount for physical card payments and 0.4% for digital payments. Additionally, MDRs are capped at 0.9% for small businesses and 0.5% for large companies.
The new guidelines also aim to make the payment process more secure by mandating that customers enter their PIN or use biometrics to authenticate payments when using credit cards. This should help reduce instances of fraud and malicious activity.
Finally, the new guidelines also mandate that merchants provide customers with a digital copy of their receipts when making payments via credit cards. This is expected to improve customer service and transparency for customers.
Overall, the new RBI guidelines are expected to reduce costs for both merchants and customers while improving payment security in India. The implementation of these guidelines in 2023-24 is likely to have a positive impact on the payments landscape in India.