subject: Debit Card Use Can Be Popularised By Cutting Mdr [print this page] Use of debit cards can be popularised within the country if Reserve Bank of India (RBI) accepts a proposal that banks cut fees for debit card payments by bringing down merchant discount rate (MDR) or card commissions, a study by Indian Institute of Technology, Mumbai (IIT-B), said here.
The study presents key issues referring to India's retail payment system and focuses on how the country will transit from the prevailing money primarily based retail payments to cashless payments.
"Transition from the existing money based retail payments to cashless payments will occur by promoting payment through debit cards", Professor Ashish Das and Rakhi Agarwal of the Department of Arithmetic, said in a very technical report "Cashless Payment System in India- A Roadmap", which has been submitted to the RBI.
"This can need rationalising prices associated with the use of debit cards, making them a lot of secure and conducting focused financial education schemes for increasing public awareness," Das said.
This transition would cause saving currency management prices and generate valuable information on spending behaviour of the masses, he said.
With an eye fixed to boost an efficient cashless payment system for the country, the report has prompt directions for optimising usage and rationalising pricing patterns.
"Though card based mostly payment systems are modish for several years, its use and popularity is still limited," the study said.
There are one hundred ninety lakh credit and one,900 lakh debit cards within the system, however annually there are simply eleven transactions per credit card and one transaction per debit card, he said.
This study meted out a review of the roles performed by various players of the system to find reasons for this subdued transition to cashless payments, Das said, adding that it got wind of a structured and implementable road map to move towards a cashless retail payment system in India.
Director,II-B, Prof Devang Khakhar said,"The work of Professor Ashish Das, Professor of Statistics, on advantages of cashless retail payment exemplifies the necessary role of Statistics for policy. I'm sure that the Government of India and also the Reserve Bank will find his analysis valuable in their efforts for bringing down the currency management costs."
Das said the report offers an in-depth understanding of the concept and operating of the cardboard primarily based payment system.
"It gives a scientific analysis of the payment system for the country's monumental retail sector," Das said adding that the study also conducted a survey among merchants other than an extensive review of international practices and freelance interactions with major market players.
Das said Major recommendations of the study are; encourage usage of no-frill debit cards and usher in awareness on debit card usage among merchants and cardholders through centered money education campaigns, MDR on all no-frill debit cards be mounted at 0.2 per cent per transaction with a cap at Rs 20, a no -surcharge rule can be applied strictly to no-frill debit cards, create all debit card transactions at POS PIN-based, cash withdrawal at POS will be clubbed with purchase and merchants to be given freedom to surcharge on credit cards.
