Why is MDR a percentage of transaction value

Why cant MDR charge be capped at say INR 20. So make it 2% percent of transaction say till txn value 1000 and above that it should be capped at INR 20.

That way if I buy 50,000 washing machine on my credit card, the merchant should only incur 20 rupees. The 2% benefit could be passed to consumer as incentive for paying digitally.

LC please take this up with Govt. more  

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On one side we want cashless and quick transaction and on the other we discourage it by charging on payment thru card.Firstly it should be stopped or it could be charged a token amount and not as percentage. more  
Got the following information from Google: MDR is charged as PERCENTAGE OF THE TRANSACTION......

MDR is the cost paid by a merchant to a bank for accepting payment from their customers via credit or debit cards every time a card is used for payments in their stores. The merchant discount rate is expressed in percentage of the transaction amount. BusinessToday.in Last Updated: January 18, 2018 | more  
Excellent suggestion so that more digital transactions take place. more  
Digital payment is for the comfort and ease of doing business for both the customer and the shopkeeper. MDR is levied by the entity which facilitates these transactions as a user fee to the shopkeeper. MDR is not supposed to be borne by the customer. However shopkeepers try to pass down this buck to the customer to cling on to their profits. This was the practice in the initial days. However most of the shopkeepers today do not charge MDR to the customers.

MDR / transaction charges / convenience fee is now a days charged only by the government entities or government controlled (price control) entities. Everybody would have encountered this while paying utility bills, buying rail / airline tickets, while filling fuel, paying online fees etc. This is because their charges are fixed (and regulated) and MDR which gets added over and above the total bill amount is not factored in the cost. Hence they pass on the amount to the customer.
So while it is not possible to abolish MDR (till it is handled by private entities) it makes sense to charge as a percentage up to a ceiling and then fix it thereafter.

Actually the best step is for the RBI to take charge and ask the banks to take care of digital transactions and abolish MDR completely as has been done with ATM withdrawals, NEFT and RTGS. After all the money is moving between customer account and shopkeeper's account within the banks itself and banks are anyways making profit on our money. more  
MDR % should be reduced to 0.5% from 2%. more  
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