In an attempt by State Bank of India (SBI) to tightens its grip over revenue expenditures, the country's largest lender has informed its payment partners that it is not going to provide them any commission for digital transactions, reported Business Standard.
The bank will not be sharing any fee with payment partners if the transaction going through its payment gateway is of less than Rs 1,000 and was from a non-SBI debit card, the banks said in an email to their payment partners, the report said.
The decision came as part of the rationalisation of merchant discount rate (MDR), i.e., the cost of a digital transaction charged every time a customer swipes a card, the daily said.
While this is distributed between involved payment players, a new policy by the government to reimburse MDR on customer transactions up to Rs 2,000 has reportedly prompted SBI to make the decision, it said.
In addition, RBI also has cut down MDR to 0.4% to all debit card transactions of up to Rs 2000.
Under the new arrangement aggregators will find it impossible to make money if the card used is not issued by the SBI, the report said.
This will have big impact on companies operating in the sector, the report said adding that the decision will be applicable for all transactions made since the beginning of the year.
“We are going to see a substantial impact in our top line and profitability because of this anti industry move as SBI payment gateways are connected to almost every big eservice and a lot of transaction flows through their pipes…This is not how you expect a bank as big as SBI to behave, a few hundred millions could be loose change for them, but our businesses depend on this revenue stream. We were not consulted at any point during the process,” a payments company chief executive officer was quoted as saying in the report.
First Published: IST