Shares of SBI Cards and Payment Services dropped by over 5 percent on fears that merchant discount rates on credit card transactions may be regulated by the Reserve Bank of India (RBI).
On the Bombay Stock Exchange (BSE), SBI Cards shares fell as much as 5.8 percent to an intraday low of Rs 942.90 apiece. On the National Stock Exchange (NSE), SBI Cards shares plunged to Rs 943.10 apiece intraday, down 5.7 percent.
At 1:35 pm, SBI Cards' shares traded 4 percent lower at Rs 961 apiece on the BSE. The benchmark Sensex index was 0.24 percent down at that time.
Merchants are charged a fee by digital payment service providers for processing debit and credit card transactions. In the case of credit cards, the rate is currently unregulated and fixed by the two parties bilaterally.
The central bank floated a discussion paper on Wednesday, and has sought feedback for a comprehensive review of the rules and procedures for levying charges in different payment systems to assess their impact on the efficiency and growth.
Credit card is one of the most profitable products amongst all payment products offered by banks, so the risk of being regulated is always high, said analysts.
"There is no specific stance from the regulator at this point and hence, the overhang on MDR (merchant discount rates) would continue for a few more quarters," said Kotak Institutional Equities in a report.
However, the brokerage has not tweaked its investment thesis towards SBI Cards and awaits final guidelines on the merchant discount rate charges.
-With PTI inputs
(Edited by : Anshul)
First Published: Aug 18, 2022 1:44 PM IST
