0% Card Swipe PoS Machine Merchant Discount Rate

Entrepreneurship, Manufacturing, Services, Trading / By

Most of the Merchants and Traders in India either do not have a Card Swipe PoS machine or (if they do have one) charge an additional 2-3% Card Swipe charges. On the face of it, it seems unjust, and yet, the practice is quite common – particularly amongst MSMEs.

What then, is the reason behind the same?

– Merchant Discount Rate (MDR) or Transaction Discount Rate (TDR)

What is MDR?

MDR is the % fee charged by Card PoS service providers on every transaction made.

Thus, since merchants themselves get charged this MDR –

  1. They either do not provide for a Card payment PoS machine – dealing only in Cash or Cheques (and now UPI) or,
  2. They pass this burden onto their customers in the form of 2-3% additional card payment charges.

While the RBI has time and again declared this additional 2-3% levy by merchants as illegal, it hasn’t been able to end the practice. In fact, even government websites like IGNOU and IRCTC, charge as extra, payment gateway charges.

#CashLessIndia

The problem is that –

  1. Merchants feel that Payment Gateways and Banks should bear the MDR due to their reduced cash-handling leading to intangible savings in lesser physical branches, staff requirements, etc.
  2. Payment Gateways feel that they have invested in the PoS eco-system and should get consequent returns.

Neither is there an easy solution to this, nor am I going to try and give one. 😁

Instead, I am suggesting a workaround this conundrum in the form of –

  1. BharatSwipe by BharatPe
  2. BankBox by MSwipe

Both these machines allow Merchants to accept Card Payments using their PoS devices at 0% MDR !!!

It can’t be that simple, what is the catch here?

BharatSwipe Machine by BharatPeBankBox by Mswipe
0% MDR,

₹0/- monthly rental

0% MDR,

₹0/- monthly rental

But settlement time is T+15 days;

For settlements before 15 days, normal MDR of 2% + GST will be applicable

Money settled to MSwipe ‘MoneyBack Card’ – which can then be used for purchases and transactions as a Debit Card
Also, at the end of 15 days, you need to manually transfer the money from the BharatPe account to your account using the BharatPe AppSettlement to bank account (instead of MoneyBack Card) will be at normal rates of 2% + GST

Thus, if you can live with this small inconvenience of BharatPe/Mswipe, you can start accepting payments from your customers @0% MDR as a ‘Win-Win’ for both you, and your customer. Else, you can always revert back to the earlier payments methods and options.

Go #BrewSomeMoney !