Impact of RBI Guidelines on Credit Card Swipe Charges for Businesses

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The advent of digital transactions has revolutionised the way businesses operate, and credit cards have been pivotal in this transformation. However, the recent Reserve Bank of India (RBI) guidelines for credit card swipe charges have stirred quite a discussion among businesses. This article aims to navigate the implications of these guidelines and how they influence the credit card interest rate.

Understanding Credit Card Swipe Charges

Before diving into the RBI guidelines, it’s crucial to understand what credit card swipe charges are. Also known as Merchant Discount Rate (MDR), these charges are levied every time a business uses a point-of-sale (POS) terminal to process a credit card transaction. The MDR, which is typically a percentage of the transaction value, is shared between the bank, payment gateway, and the card issuing company.

But before we go further with this topic, let’s have a look at how we can apply for the Airtel Axis Bank Credit Card via the Airtel Thanks App:

Step 1: Download the Airtel Thanks App through PlayStore or App Store.

Step 2: Go to the ‘shop’ category, then choose ‘credit card’ under ‘Financial Services’. Step 3: Fill the form and provide information for KYC.

Step 4: Get your credit card delivered in 24 hours of your approval.

RBI Guidelines for Credit Card Swipe Charges

The RBI issued guidelines in 2020 aiming to standardise and rationalise the MDR on credit card transactions. The objective was to boost digital transactions by making them more affordable for businesses, particularly small and medium enterprises (SMEs).

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Under these guidelines, the MDR for transactions below INR 2000 is capped at 0.90% for large businesses and 0.40% for SMEs. For transactions above INR 2000, the rates are 1.20% and 0.90% respectively. The move was aimed at encouraging more businesses to adopt digital payments, which in turn, would stimulate the economy.

Impact on Businesses

The most direct impact of these guidelines is on the cost of doing business. Businesses now pay a lesser amount per transaction, which can lead to significant savings in the long run. This is especially beneficial for SMEs, which often operate on thin margins.

However, the reduction in MDR also means lesser revenue for banks and payment gateways. This could potentially lead to an increase in the credit card interest rate to compensate for the lost revenue.

Role of Credit Card Interest Rate

The credit card interest rate is another crucial aspect that businesses need to consider. It is the rate charged by the bank for providing credit through the card. While the MDR is a cost to the business, the interest rate is a cost to the customer.

An increase in the credit card interest rate could deter customers from using credit cards, thus affecting businesses. Therefore, businesses need to monitor any changes in the interest rate closely.


The RBI guidelines for credit card swipe charges have certainly made digital transactions more affordable for businesses. However, the potential impact on the credit card interest rate could pose challenges. As the digital economy continues to evolve, businesses need to stay updated with such changes and adapt accordingly.

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In conclusion, the RBI guidelines are a step in the right direction for encouraging digital transactions. However, businesses must remain vigilant of the potential implications on their operations and customer behaviour. As always, the key to success lies in adapting to change and making the most of the opportunities it presents.


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