BB sets 1% minimum merchant discount rate for Bangla QR

Many merchants will face higher charges on digital payment transactions after Bangladesh Bank introduced a minimum 1% Merchant Discount Rate (MDR), including VAT, for Bangla QR-based merchant payments under the National Payment Switch Bangladesh (NPSB).

Previously, there was no minimum MDR for such transactions, allowing some banks and payment service providers to charge little or no fee. 

Under the new policy, merchants paying less than 1% will now incur higher transaction costs.

Bank officials warned the move could discourage some small businesses from accepting digital payments, potentially slowing the country’s transition toward a cashless economy.

In a circular issued on Wednesday, the central bank said the measure is intended to make the digital payments ecosystem more structured, sustainable and commercially viable.

Under the revised guidelines, acquiring banks and payment service providers (PSPs) will be allowed to collect a minimum MDR of 1% (including VAT) from merchants accepting payments through Bangla QR using bank accounts, debit cards, prepaid cards, credit cards, mobile financial services (MFS) and PSPs.

Bangladesh Bank said all other fees, charges and conditions specified in PSD Circular No. 2, issued on 6 February 2025, will remain unchanged. 

That circular set the maximum concession limits for merchants on Point of Sale (POS), Bangla QR and e-commerce transactions conducted through the NPSB.

The latest directive applies only to Bangla QR merchant payments processed through the NPSB.

To encourage wider adoption of digital payments, however, the central bank has allowed acquiring institutions to offer promotional discounts for a specified period.

According to Bangladesh Bank officials, banks and MFS providers previously charged merchants anywhere between 0% and 3%, depending on commercial arrangements. 

With the introduction of the mandatory 1% minimum MDR, businesses that had been paying lower rates will see their costs increase, a move that officials fear may reduce the incentive for some merchants to accept digital payments.