In order to incentivise greater adoption of digital payment methods, the Reserve Bank has announced special measures to be adopted between 1st January and 31st March next. In a notification issued from Mumbai today, RBI has advised banks to cap the Merchant Discount Rates for debit card transactions upto 1000 rupees at 0.25 percent of the transaction value. For transactions between 1000 and 2000 rupees, the merchant charges shall be capped at 0.5 percent of the transaction value. Earlier, the charges were 0.75 percent of the transaction value upto 2000 rupees and 1 percent for transaction amount above Rs 2000. RBI has clarified that these measures will not apply to ATM transactions but will apply to payments made to the Government using debit cards. In another notification, RBI has asked banks and prepaid payment instrument issuing entities not to levy any charges for transactions upto 1000 rupees that are settled using Immediate Payment Service, USSD based *99# and Unified Payment Interface systems.