The Reserve Bank of India (RBI) has floated a concept paper that proposes measures to improve card acceptance infrastructure in the country.

The paper proposes formation of an Acceptance Development Fund (AFD), which are market-driven initiatives where different stakeholders in the card payment value chain collaborate to launch a program to allow wider deployment of card acceptance infrastructure.

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The paper also proposes rationalisation of Merchant Discount Rate (MDR) on debit cards.

To rationalise MDR, which is considered a key revenue source in the card industry, the regulator has proposed four options that includes levying a flat or fixed fee as MDR for transactions more than a specific threshold value.

RBI said that for transactions less than this value, MDR may continue at ad-valorem basis.

In addition, the regulator has also highlighted the need to rationalise MDR on credit card transactions. At present, different banks charge varied rates on credit card transactions.

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"The Reserve Bank’s over-arching Vision for Payment Systems in recent years has been the encouragement of electronic payments and migration to a "less-cash" society. The policy focus of the Reserve Bank has been to facilitate the growth in electronic payment services and also ensuring safety and security of such transactions. Recent Government announcements support and reinforce the need to migrate from cash payments and to promote card and other electronic payments," the regulator said in a statement.