India appears to be on a parallel course with that of the U.S. in terms of merchant complaints over the fees applied to debit and credit card transactions, only it’s about 16 years behind.

The country’s central bank contends commercial banks in India should not charge merchants similar interchange rates for both debit and credit cards, and in a statement earlier this month said the practice should be stopped.

In what became widely known as the Wal-Mart case in the U.S. because of the large retailer’s presence as a plaintiff, Visa Inc. and MasterCard Worldwide eventually settled, agreeing to pay more than $3 billion to merchants, which had filed suit in 1996 over the card brands’ setting of debit card interchange at rates similar to their credt cards and rules that required merchants to accept all of their branded cards if they accepted any one of them. The card brands also agreed in ther settlement to lower their interchange rates on signature-debit cards.

The Reserve Bank of India says the networks similarly should lower the interchange fees on debit cards to help grow merchant acceptance of electronic payments across the country.

 This fee now stands at 1.1% to 1.2% of the sale, a central bank spokesperson tells PaymentsSource, indicating that since debit cards carry less risk, the rate applied to them should be lower.

The central bank does not intend to pursue regulatory intervention in pricing, preferring instead to allows the market to fix its own pricing. But it may intervene if the pricing schemes remain “illogical,” the spokesperson says.

According to central bank data, banks have issued some 268 million debit cards in India, a number it expects will grow.

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