DBD is a fee paid by a merchant to banks and non-bank companies for providing zero-interest EMI payments facility whereas MDR is paid by merchants to a bank via which a card payment has been made.

New Delhi: Mobile phone retailers have written to the finance minister to waive off fee levied on merchants while executing card payments and zero-cost EMI for buyers to boost cashless payments post lockdown, ease financial burden on retailers who are grappling with practically no sales.
In a letter to finance minister Nirmala Sitharaman dated April 13, the All India Mobile Retailers Association (AIMRA) has said, “We would appreciate it if the Finance Ministry could approach the RBI or the respective authorities to direct NBFCs and Banks to waive off DBD (dealer by down) and MDR (merchant discount rate) charges to retailers on paper finance and on digital transactions for at least 6 months post lockdown.”

Retailers are paying DBD charges of 1.5 per cent to NBFC’s on financing mobiles and MDR commission of 1.5 per cent to 3.5 per cent on different credit cards for digital transactions, AIMRA said in the letter.

The body which represents 1.5 lakh brick-and-mortar phone retailers has urged that the Reserve Bank of India (RBI) and banks should absorb the cost of transactions as mobile business which works on very thin margins will take at least six-nine months to recover after the lockdown is lifted. The government on Tuesday extended the lockdown to May 3.

As a relief measure against the COVID-19 pandemic the Reserve Bank of India (RBI) had permitted all banks and NBFCs to allow a moratorium of three months on repayment of term loans outstanding on March 1, 2020.
Retailers say even with the deferment of EMIs, the market will need months to get back cash flows.

“We also feel with the digitisation of India, charges like these should at least be brought down at par with other developed countries, where they range from 0.25 per cent to 0.5 per cent maximum. In India, these charges range from 1.5 per cent to 3.5 per cent depending on the category of the credit card,” the letter said.

Given the outbreak of COVID-19, bringing down DBD will encourage retailers to completely do away with paper currency which poses risks of transmission, AIMRA said.